The Blues threw away a half-time lead at the Cristal Arena, with Ramires putting them ahead and David Luiz wasting a spot kick before Jelle Vossen exposed more bad defending by netting Genk's first goal of the competition.
That threw Group E wide open with two matches remaining but of more concern to Chelsea may be the behaviour of their fans, who repeatedly chanted about QPR defender Anton Ferdinand in response to the John Terry racism inquiry.
Tuesday night's result and Valencia's victory over Bayer Leverkusen meant the top three sides are now separated by only three points, piling on the misery for Chelsea who had been hoping to put a nightmare week behind them.
That plan was scuppered even before kick-off after the Metropolitan Police announced they had launched a formal investigation into allegations Terry racially abused QPR defender Ferdinand, something the Blues and England captain denies.
Terry played no part in the game, which saw manager Andre Villas-Boas stick to his promise to keep playing a high defensive line after Saturday's 5-3 Premier League defeat to Arsenal.
But Chelsea were exposed again by a Genk side who were much improved from their 5-0 thrashing at Stamford Bridge two weeks earlier.
After getting in behind early on, the hosts almost caught their opponents out from a corner when an unmarked Khaleem Hyland sent a weak header at Petr Cech.
Genk were soon in again but, unlike Arsenal, lacked the quality to punish their opponents.
The same could not be said for Chelsea, who finally pounced in the 25th minute when Ramires played a lovely one-two with Fernando Torres, burst into the box and drilled the ball underneath Laszlo Koteles from a tight angle.
The visitors' defence briefly wobbled again before Torres went close to making it 2-0 with a 25-yard screamer.
Ramires should have doubled his own tally 10 minutes before the break when he nodded Ashley Cole's back-post cross wide after more good work from Torres, while Anthony Vanden Borre almost put the ball in his own net from Florent Malouda's cutback.
That was set up by a brilliant reverse pass from Raul Meireles, who rattled the crossbar with an even better 25-yard blast.
A second goal appeared inevitable and looked to have arrived six minutes from the break when Thomas Buffel handled Malouda's cross in the box. David Luiz strangely took the penalty but Koteles guessed right and pushed the ball to safety.
Just before that, the Chelsea fans began chanting about Ferdinand, something they repeated again before Daniel Tozser bent over a free-kick on the stroke of half-time.
The chanting continued at the restart as Genk tried to get back in the game, but once again fluffed their lines in the final third.
They should have equalised in the 54th minute when Vanden Borre carried the ball 40 yards before threading in Kennedy Nwanganga, but the striker's finish was too close to Cech.
Kevin De Bruyne, who has long been linked with Chelsea, was giving a better account of himself than he had two weeks earlier and he was involved as Genk levelled just past the hour mark.
As against Arsenal, it was Chelsea's right-hand side that was exposed, De Bruyne playing the ball to Fabien Camus whose cutback was swept home all too easily by Vossen.
Villas-Boas quickly responded by withdrawing Nicolas Anelka and Ramires for Daniel Sturridge and Frank Lampard, with Genk soon taking off Buffel for Dugary Ndabshinze.
Meireles should have restored Chelsea's lead 16 minutes from time when he sent a free header straight at Koteles after a marauding run and cross from Malouda.
De Bruyne was booked for felling Jose Bosingwa and Juan Mata came on for Oriol Romeu before Lampard missed an absolute sitter with 11 minutes remaining when he somehow failed to connect properly with Sturridge's cross four yards from goal.
Chelsea might have been even more embarrassed late on when Genk substitute Anthony Limbombe forced a sprawling save from Cech but they almost scored an extraordinary winner in stoppage time.
Lampard played in Malouda, who lifted the ball over Koteles only to see a combination of Anele Ngongca and Nadson clear the danger, narrowly avoiding an own goal.