Liverpool were without injured playmaker Philippe Coutinho, sidelined by a shoulder problem, but they came close to taking the lead in the first half at Anfield when visiting goalkeeper Artur Boruc produced a full-stretch save to keep out a Steven Gerrard free-kick.
Daniel Sturridge then had a penalty appeal turned down after tangling with Dejan Lovren, and it was Lovren who broke the deadlock in the 53rd minute with a back-post header from a left-wing corner.
Only a fine triple save from Simon Mignolet prevented Southampton from adding to their lead, but Lovren's goal proved enough to inflict a first league defeat on Liverpool since a 3-1 loss to the same side last March.
Liverpool will lose their grip on first place if Chelsea win at home to Fulham later on Saturday, while Everton now trail their city rivals by only a point after Romelu Lukaku scored on his debut to settle a thrilling game at Upton Park and help preserve the last unbeaten record in the division.
West Ham twice took the lead, via a deflected shot from Ravel Morrison and a Mark Noble penalty, only for Leighton Baines to level on each occasion with a pair of sensational free-kicks from 25 yards.
Noble was then sent off for a rash foul on Ross Barkley before Lukaku bravely headed home an 85th-minute winner in his first game since signing on loan from Chelsea.
Another on-loan striker, Loic Remy, scored twice on his first home start for Newcastle United, but the Frenchman still finished on the losing side in a 3-2 defeat by Hull City.
His tenth-minute header was cancelled out by Robbie Brady, who teed up Ahmed Elmohamady for a second equaliser early in the second period after Remy had curled home a second goal on the cusp of half-time.
Sone Aluko settled the match in memorable fashion with 14 minutes remaining, meeting George Boyd's left-wing cross with a sumptuous volley that crashed into the net off the right-hand upright.
Stephane Sessegnon came back to haunt his former club Sunderland by scoring the opening goal in a 3-0 win on his debut for new side West Bromwich Albion.
A deadline-day signing from Sunderland, the Benin midfielder pounced in the 20th minute, before late goals from Liam Ridgewell and Morgan Amalfitano completed the victory.
Sunderland remain rooted to the foot of the table and manager Paolo Di Canio's misery was compounded when striker Steven Fletcher appeared to dislocate his shoulder.
Earlier, Aston Villa lost key striker Christian Benteke to injury but still managed to snap a three-game losing streak with a 1-0 win at Norwich City.
Last season's top scorer with 19 goals, Benteke limped off with an injury during the first half but his replacement, Libor Kozak, tapped in the game's only goal within two minutes of coming on.
Villa manager Lambert played down Benteke's injury, saying: "The medical staff reckon it's his hip flexor. Hopefully it's not too bad. But Libor Kozak came on and scored within 90 seconds, which shows he'll endear himself to the crowd."
Manchester United visit Manchester City on Sunday in the season's first Manchester derby, when both City manager Manuel Pellegrini and his United counterpart David Moyes will be sampling the fixture for the first time.