QPR ran out 3-1 winners at Ashton Gate to take top spot in Nationwide Division Two.
City scored first through Scott Murray but then lost both strikers Lee Matthews and Lee Peacock to first-half injuries.
Poor defence then allowed Rangers to score twice in the opening seven minutes after the break. Karl Connolly, who had equalised in the first half, put them ahead before Kevin Gallen celebrated his 27th birthday by wrapping up the win in the 52 minute.
City's first home defeat would have been heavier but for a steady game from centre-back Tony Butler, whose loan from West Brom is being extended for a second month.
The first break came City's way in the 11th minute as Murray lobbed defended Tommy Williams to find an open net.
The lead lasted just 13 minutes as a failure in the home defence saw Matt Rose knock an intelligent ball into the area with the outside of the left boot.
Connolly was too sharp for City and ripped in the equaliser, the first goal that City had given away at home in the league.
A quite remarkable first half saw City lose both their first choice strikers Mathews and Peacock to injuries.
Their lack of a target man was to prove decisive, but even so they should have gone in at the break ahead after Craig Woodman crashed a rising drive against the bar and then sent a Murray cross against a post.
In between there was an even more incredible miss from another searching Murray ball when Peacock, needing a tap-in at the far post, somehow screwed his sot wide.
These misses proved fatal in the first seven minutes of the second half as Connolly converted a fine run and cross by Williams while Gallen then headed in a long free-kick by Terrell Forbes to put the game beyond City's reach.
City manager Danny Wilson said: "If you don't take your chances you can't expect to win but at the moment any side in this division is capable of beating any other."
A delighted Ian Holloway commented: "I've been waiting years for a moment like this against Bristol City, but give the credit to the lads who are performing magnificently."