A 1-1 draw in the Vicente Calderon stadium was not enough to move above their city rivals as Valencia produced a spirited display to keep their own Champions League hopes alive.
Jonas surprised the home side inside five minutes but Radamel Falcao promptly beat the offside trap at the other end to stab the ball home and restore parity within a minute.
Despite home pressure after the break, that's how it stayed and the result leaves Atletico a point behind Real with Valencia just a point outside the top four themselves.
Earlier on Sunday, bottom-club Deportivo La Coruna recorded back-to-back victories for the first time this season after a narrow win over fellow strugglers Real Mallorca.
Victor Casadesus gave Gregorio Manzano's side the lead but a wonderful goal from Silvio put Deportivo back on level terms before the break.
Veteran defender Carlos Marchena gave the visitors the lead early in the second half and Riki extended the advantage, before Alfaro scored late on to set up a tense finish. But Deportivo held on to keep their hopes of survival alive with the Galician side now just four points from safety.
Osasuna were another side whose hopes of avoiding relegation were handed a huge boost after they came from a goal down to win at Valladolid in fine fashion.
An own goal by Ruben gave the hosts an early lead but two goals by Kike Sola within 10 minutes after half-time put Jose Mendilibar's side ahead. Miguel De Las Cuevas then scored his first goal for the club to make sure of the points and lift Osasuna seven points clear of the drop zone.
Elsewhere, Real Sociedad's hopes of a Champions League place suffered a setback as they were held to a draw at Espanyol. In fact, they left the Cornella-El Prat grateful for a point after Javi Lopez's own-goal inside the final quarter of an hour denied the hosts all three points.
It was the second time Sociedad had come from behind in the match, David Zurutuza scoring either side of strikes from Sergio Garcia and Christian Stuani in an eventful first half.
Sociedad remain in fourth but are now just a point clear of Malaga in fifth as the race for the final Champions League spot heats up.