Jose Bosingwa's own goal after only five minutes decided the contest as Carlo Ancelotti's men saw their faint title hopes all but disappear completely.
Salomon Kalou missed a golden second-half chance, shooting wide when clean through, and Didier Drogba shot against the outside of the post, but resilient Wolves stood firm and could have had a second goal if Stephen Hunt's free-kick had dipped under rather than hit the bar.
The defeat means Chelsea have had just two wins from their last 11 league games, and they stand nine points behind leaders Manchester United having played a game more.
Branislav Ivanovic returned from suspension to start at centre-back for the visitors, who also brought in Kalou for Nicolas Anelka and Bosingwa for Paulo Ferreira.
Wolves also made three changes from their defeat at West Ham, with Kevin Doyle returning from a thigh injury and Steven Fletcher coming into the team to partner him up front. Dave Edwards also started.
Chelsea came into the game on their worst run of form during the reign of owner Roman Abramovich, having taken just 10 points from their previous 10 league games, and they got off to an awful start.
Ronald Zubar's fierce shot from 35 yards tested Petr Cech, who parried it away for a corner.
And the resulting delivery from Hunt was attacked by Zubar at the near post before Bosingwa turned it unwittingly into his own net under pressure from Fletcher from almost on the goalline.
The Wolves fans taunted Ancelotti with chants of 'You're getting sacked in the morning'.
Wolves were looking up for the fight, with Zubar in particular putting himself about, hassling and then winning the ball off Ashley Cole in the Chelsea half before laying it off to Doyle, whose weak left-footed shot was straight at Cech.
At the other end Wayne Hennessey had to be alert to stick out a leg to stop Kalou's close-range effort from Florent Malouda's cross.
John Terry then got away with a talking-to from referee Mark Halsey after pushing Hunt softly in the back of the neck as he looked to get the ball back for a Chelsea free-kick.
Chelsea were out very early for the second half and they started with intent, Michael Essien blazing over from outside the area and Cole seeing his low angled shot from the left of the box comfortably held by Hennessey.
At the other end Cech had to punch away Matt Jarvis' corner from underneath his crossbar.
Kalou should have levelled in the 53rd minute when Frank Lampard's clever backheel played him in, but the Ivorian could only drag his left-footed shot wide of the far post as Hennessey came off his line to narrow the angle.
Drogba then headed straight at Hennessey from a Kalou cross.
But Wolves were standing firm at the back and looking dangerous on the break and Fletcher should have sent Doyle through on goal but his pass was poor.
Drogba was posing more of a threat and he turned Christophe Berra in the area only to see his snap-shot hit the outside of the near post.
Kalou, who was having a poor game, was replaced by Anelka after 66 minutes.
Wolves went within a whisker of doubling their lead as Hunt's left-footed free-kick hit the top of the bar, but they were almost undone at the other end as Malouda got free in the left channel but shot wastefully wide.
Hunt should have done better when he found himself in acres of space down the left, but Essien got back to make a crucial tackle.
Hennessey came racing out of his area to win a sliding challenge with Anelka, before Drogba summed up Chelsea's night by firing a promising injury-time free-kick from just outside the area tamely into the wall.