Liverpool suffered just their second defeat of the season in Toulouse, dramatically losing 3-2 after a stoppage-time equaliser was overturned by a VAR review.
Toulouse were in the French second tier just two seasons ago, and two weeks ago thrashed 5-1 at Anfield, yet led when a terrible Kostas Tsimikas error put Aron Donnum through on goal.
Thijs Dallinga doubled the lead with a fine finish as Toulouse started the second half brilliantly, and even a bizarre own goal did not seem to halt their momentum as substitute Frank Magri scored two minutes later to make it 3-1
Diogo Jota pulled an 89th-minute goal back for Liverpool to set up a nervy finish, and they thought they had levelled the score when Jarell Quansah scored what would have been his maiden Reds goal at the end of a goalmouth scramble in the seventh added minute.
Yet a belated VAR review ruled it out three minutes and two Toulouse yellow cards later, with an Alexis Mac Allister handball spotted in the extended build-up.
Liverpool are still top of UEFA Europa League Group E, on nine points, but Toulouse are just two behind in second place and have a three-point cushion over third-placed Union Saint-Gilloise, who lost to LASK.