Key Moments
Chelsea's hopes of qualifying automatically for the European Cup knockouts were hit hard as their Italian opponents came from behind to claim victory in their home stadium.
Both sides went into this match with matching records in the initial stage of this season's tournament, having won, tied one, and lost to be on 10 points.
For extended periods there was not much to separate them in this encounter too, even though Chelsea got their noses in front in the opening 45 minutes when Joao Pedro turned in the captain's delivery.
But The Serie A side always looked a threat going forward, with ex- Charlton and Everton attacker creating issues for the backline.
James fired wide in the after the break but the home team upped the intensity and justly levelled when ex-West Ham striker headed in a cross.
Alejandro Garnacho hammered a strong effort straight at the goalkeeper but they scored the decisive strike in the closing stages when the Chelsea defenders backed off the midfielder, who made no mistake with a powerful shot.
The visitors tried to salvage a draw late on but a excellent save by the Atalanta goalkeeper kept out Pedro.
The final score means Chelsea fall out of the automatic qualification places—the positions that qualify automatically for the next round—to eleventh with two league phase games remaining.
Atalanta, meanwhile, leap up to third, three points clear of the Londoners.
This was a deeply disappointing outcome for Chelsea as even a point was keeping them in a strong position to achieve the top eight finish they require to bypass the lottery of the play-offs.
But they lacked concentration in their defensive duties with seven minutes left on the clock and Atalanta capitalised completely.
The Italians are in fine fettle at the moment so this was always going to be a difficult examination for the visitors, but they will be annoyed to be departing with nothing after securing the early advantage.
But the wider issue is that this perpetuates Chelsea's worrying streak of results in all competitions.
Since beating the Spanish giants 3-0 at the close of November they are now winless in their last four games.
Manager Enzo Maresca made five alterations for this match as he persisted with his strategy of moving players in and out of the starting 11.
The rotations here followed after he implemented the same number for the loss to Leeds United and six for the tie with AFC Bournemouth prior to the trip to Atalanta.
The coach will see rotation as necessary as he attempts to manage players' minutes and challenge both at home and abroad, but he insisted the key nucleus of players stays the same for important games.
"I think tonight [in] the starting lineup we had eight or nine players who featured against Tottenham Hotspur, FC Barcelona, and Arsenal," he stated.
"If you look at the five changes that we did relative to Bournemouth it is a change but it is the eight or nine players playing Barcelona.
"The ones who played tonight are the ones playing almost all the matches."
The Blues' next Champions League game sees them host the Cypriot side on the coming Wednesday (20:00 GMT).
The Italian team, on the other hand, are at home to Athletic Club at the identical kick-off time.
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