Raul gave the Royal Blues a good start with a goal in the 13th minute, but two goals from Mario Mandzukic turned the game around to earn the Wolves only their second win of the season and end a run of three defeats.
The win would have been even more satisfying for their coach Felix Magath, who left Schalke under a storm cloud in March.
Magath admitted before the game that Raul was the biggest ever signing of his career, and the Spaniard proved why he is still so highly rated by his former coach with the opening goal in the 13th minute.
He raced in to meet Jefferson Farfan's cross before anybody else at the near post and nudge it past Wolfsburg goalkeeper Marwin Hitz.
Schalke were good value for their lead too as they dominated possession, but the Wolves levelled against the run of play in the 33rd minute with Mandzukic finding space in the centre and scoring with a diving header from three yards out.
That gave the home team confidence and Christian Trasch's shot was tipped round the post two minutes later.
However, Schalke could and probably should have gone back in front on the stroke of half time, but Farfan chose to square the ball when there was no team-mate in support rather than shooting.
The second half was an open affair with chances at both ends.
Klaas Jan Huntelaar came close with a header which Hitz saved well before Mandzukic grabbed the winner.
He intentionally deflected Marcel Schafer's 25-yard free-kick past the wrong-footed Fahrmann to earn Magath one of the sweetest and necessary victories of his coaching career.