Bayern coach Pep Guardiola fielded an experimental side, in view of the second leg of his side's Champions League quarter-final against Manchester United on Wednesday, and a Sascha Molders goal in the first half punished them.
Augsburg were good value for the win against a sub-standard Bayern and boosted their chances of qualifying for Europe next season in the process.
Of course, Bayern can afford such luxuries having already secured the Bundesliga title so their defeat - coupled with a 2-1 win for second-placed Borussia Dortmund over Wolfsburg - was of little consequence.
Dortmund had to come from behind to beat Wolfsburg, trailing to a 34th minute strike from Ivica Olic, but they were much improved in the second half and won with goals from Robert Lewandowski and Marco Reus.
Dortmund are three points clear of third-placed Schalke, who drew 1-1 at Werder Bremen.
Werder took the lead through Franco Di Santo, who also netted in last week's 2-1 win over Hannover, but the hosts had to settle for a point on this occasion with Leon Goretzka levelling for Schalke in the first half.
Borussia Monchengladbach boosted their Champions League hopes with a 2-0 victory at relegation-threatened Nurnberg.
A first-half strike from Juan Arango and a Max Kruse penalty in the second increased the pressure on Gertjan Verbeek as his side dropped into the bottom three.
Two late goals handed Stuttgart a massive three points in a 2-0 win over local rivals Freiburg in the battle for survival.
Substitute Alexandru Maxim scored the first on 69 minutes, and Martin Harnik sealed the victory a minute from time.
The result lifted Stuttgart back out of the bottom three and within two points of their visitors, after Hamburg's 2-1 triumph over Bayer Leverkusen on Friday night had seen them slip to 17th spot.
Eintracht Frankfurt took what could be a decisive step away from relegation danger with a 2-0 win over Mainz in another derby.
Joselu and the returning Alexander Meier scored the goals for Armin Veh's men, who moved eight points clear of the drop zone with five games of the season remaining.
Defeat dented Mainz's hopes of qualifying for the Europa League next season with three points separating them from sixth-placed Wolfsburg, who have a game in hand.