Town rose off the bottom of the table after their deserved win over in-form Forest.
A first-half brace from Upson and a Byron Webster header inspired the Glovers to a first home win of the season - and ended Forest's impressive recent run of seven games without defeat.
Yeovil manager Gary Johnson made two changes to his side that played out a goalless stalemate with Brighton last weekend, but the Glovers' display could not have been any more different during a pulsating opening period.
The Somerset side - who had notched only one league goal on home soil coming into the game - started brightly and took a deserved early lead when Upson's rifling volley was deflected past Forest goalkeeper Karl Darlow.
However, their celebrations were muted when referee Mick Russell became the fourth referee in the last five matches at Huish Park to award a penalty to the visiting side.
Simon Cox, who was brought down by defender Shane Duffy, picked himself up to take the spot-kick - but saw his tame strike saved by Wayne Hennessey, before a goalmouth scramble saw the on-loan Wolves stopper claw a second effort away and Webster head the ball off the line.
The wave of red continued to flow towards Yeovil's goal, with Cox and Radoslaw Majewski denied in quick succession by the Wales international goalkeeper.
But Upson - whose late winner at Millwall on the opening game of the season marked Yeovil's only other league win this season - raised the roof for a second time moments later after a sensational 25-yard drive flew past Darlow.
His strike ended the Glovers' barren record as the only Championship side not to score more than once in a league match this season.
The visitors responded well and instantly reduced the deficit when Jack Hobbs steered Majewski's free-kick into the path of Nathaniel Chalobah, with the youngster heading home from close range.
Yeovil bounced back on the stroke of half-time and restored their two-goal advantage when Webster headed Upson's corner against the inside of the post with the linesman ruling that the ball had crossed the line.
Forest manager Billy Davies will have been infuriated by his side's lacklustre first-half display, and they came out with renewed vigour in the second period.
Hennessey - who extended his Somerset stay for another month earlier in the week - denied Cox before substitute Jamie Mackie was thwarted.
Forest continued to flow forward with Darius Henderson forcing Hennessey into another close-range save before captain Chris Cohen headed wide.
And the visitors nearly forced a tense finale when Jamaal Lascelles ran through on goal but it was Hennessey again who was in stunning form to earn his side victory.