An early strike from the German proved to be the difference as a frustrated Blancos side rattled the frame of the goal twice as they slumped to their second Liga loss of the season
The Rojiblancos had not beaten the club from the capital since October 2009 but got off to a great start as Piotr Trochowski put them ahead inside two minutes. But in a highly-charged encounter Los Blancos were unable to equalise, hitting the woodwork twice in the second half as they succumbed to their second league defeat of the season.
The match started at a frenetic pace with the hosts taking the game straight to Jose Mourinho's men. A shot from the edge of the box inside the first minute was spilled back into the danger area by Iker Casillas but he recovered to stop Alvaro Negredo from tapping in the rebound.
Ivan Rakitic took the resultant corner and he dropped it on the penalty spot where it was met by Trochowski, who had escaped the loose marking of Angel Di Maria, and he volleyed into the roof of the net with aplomb.
Clearly aggravated at going behind, the visitors' tempers began to flair and Gonzalo Higuain was fortunate to remain on the pitch after kicking out on Fernando Navarro despite winning a free kick for his side.
He confronted the left-back again moments later, but in the 10th minute attentions were turned back to the goal mouth. Cristiano Ronaldo thumped a free-kick over the wall from 20 yards but his effort was too close to Andres Palop who dived across and turned it behind. The keeper then denied the Portuguese seconds later following a speculative attempt from deep.
Madrid began to assert themselves as the game went on and with 20 minutes played Mesut Ozil fed Higuain at the edge of the box. The striker did superbly to spin his marker but he could not add an equally impressive finish, slicing his shot high and wide.
In an attempt to bring his side back into the match, Mourinho replaced the disappointing Di Maria and Ozil with Luka Modric and Karim Benzema at half-time.
The Croatian had an immediate impact as within just seven minutes he almost drew the visitors level. From long range, Modric caught the ball superbly but Palop again got an important touch, tipping the effort onto the post.
With Sevilla unable to retain the ball, the reigning Liga champions hit the woodwork again on the hour mark. Palop failed to clear a free-kick from the left and Benzema controlled the ball at the back post. He volleyed it across goal but Sergio Ramos headed onto the bar from inside the six-yard box.
Madrid continued to search for an equaliser but their efforts proved in vain as the hosts remained compact at the back despite dropping deeper and deeper in the closing stages. Ronaldo saw his free-kick in the final minute of stoppage time fly over the bar in what proved to be their last chance of the game.
The victory moves Sevilla up to third in the table, but they may fall from there depending on Sunday's games. Real Madrid meanwhile, sit eight points behind arch rivals Barcelona in a lowly 12th position, and they could see that worsen if this weekend's remaining results go against them.