The Red Devils had 34 shots on target and missed some glorious opportunities while a clinical Smouha side hit them on the break to go 3-0 up against their illustrious opponents, with on-loan striker Marwan Hamdi in inspired form.
Hamdi, who was often called up to Egypt's squad under former coach Carlos Queiroz, opened the scoring after nine minutes following a fine individual effort, making the most of a sloppy pass from Ahly defender Rami Rabia.
Rabia was at fault again as Moroccan winger Abdelkabir El Ouadi doubled Smouha's lead on the stroke of halftime.
The third, scored right after kick-off in the second half, was a sublime individual effort from Hamdi, who capitalized on another mis-placed pass and ran half the length of the pitch to fire home, having held off several defenders in the process.
Ahly continued to create chances at will though while Hamdi twice missed from one-on-one situations at the other end to miss out on what would have been a memorable hat-trick.
Winger Taher Mohamed finally scored for Ahly on 59 minutes and substitute Hossam Hassan added another four minutes into stoppage time but it was too little, too late as the team suffered their second defeat of the season after they lost 1-0 to Masry in April.
New manager Ricardo Soares, who is expected to be officially unveiled on Thursday, will lead the team in their next league match against Gouna. Caretaker coach Sami Komsan is likely to be retained in the backroom staff.
Ahli missed the chance to trim the gap on second-placed Pyramids and leaders Zamalek.
They lie third on 44 points, five behind Pyramids and seven adrift of Zamalek, although the latter duo played three games more. Smouha moved level with fourth-placed Future FC on 39 points.
Ahly mounted an onslaught from the outset but Smouha grabbed a surprise lead after nine minutes when Rabia's wayward pass was intercepted on the edge of the area.
Winger Hussein Faisal slipped a pass to Hamdi, who took the ball to his right to flummox two challengers and beat the keeper with a low shot at his near post.
Ahly were guilty of some glaring misses, with striker Mohamed Sherif the main culprit.
He headed over from a good scoring position and hit a low shot against the post from close range after a lay-off from Malian midfielder Aliou Dieng.
Playmaker Magdi Afsha also had an angled shot denied by the outside of the post after he broke clear.
Ahly were punished when, after another poor pass from Rabia, Mostafa El-Khawaga released El Ouadi with a delightful pass behind the defence to fire into the roof of the net.
The visitors barely had time to recover, with Hamdi adding a third less than a minute into the second half following a brilliant solo effort.
Young midfielder Ahmed Nabil lost possession just inside Smouha's half and Hamdi gathered the loose ball, leaving two players trailing in his wake with a mazy run then turning a couple of defenders inside out before drilling into the far bottom corner.
As Ahly poured forward en masse, they left huge gaps at the back that Hamdi failed to exploit after missing a sitter on two occasions.
Taher pulled one back with a free, far-post header following a cross from substitute Hussein El-Shahat.
Ahly were awarded a penalty for an apparent handball but the referee changed his mind after watching a video replay as they launched a wave after wave of attacks.
Smouha keeper El-Hani soliman fumbled at a flick from Walid Soliman deep in stoppage time, with the ball rebounding off the back of Hossam Hassan and into the net.
However, Smouha held on for a rare win over Ahly that will blow the title race wide open.
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