Munster's nine-game Pro12 winning streak came to an abrupt halt at Thomond Park as Scarlets produced a stunning second-half display that sees the Irish province relinquish top spot.
A 10th straight league win looked on the cards after an impressive opening half from Munster saw them take a 21-6 lead into half-time.
However, they failed to add to their tally in the second period as Scarlets dominated, Hadleigh Parkes, Johnny McNicholl and Tom Williams running in tries as they delivered a huge shock, the Welsh side running out 30-21 winners.
The victory strengthens their grip on a top-four place, while also allowing Leinster to take full advantage and climb to the summit.
Hugely disappointing result in front of our home support. #MUNvSCA A quiet dressing room now but we will regroup & get back at it on Monday— Munster Rugby (@Munsterrugby) February 24, 2017
While Munster were suffering their first league loss since October, their rivals Leinster were cruising to victory at Rodney Parade.
They ran in eight tries to earn a 54-22 bonus-point win over Newport Gwent Dragons, Jack Conan and Luke McGrath both crossing twice in a win with huge consequences.
Leinster now have a two-point cushion over Munster after 16 matches, while Ospreys could drop the latter down to third with victory over Glasgow Warriors on Sunday.
Meanwhile, Edinburgh suffered a narrow defeat against Cardiff Blues, the Welsh side snatching an 18-17 win thanks to a late Lloyd Williams try.
It was tough on the Scottish side who had battled well throughout and had led going into the final 10 minutes, but Williams ensured a win for Cardiff - cementing their grip on seventh place.