It was Mourinho's second league defeat in charge as Madrid-born striker Javier Camunas scored the decisive goal on 62 minutes to seal an historic win for Osasuna and deal Real's title aspirations a hammer blow yesterday.
Even Emmanuel Adebayor, on loan from Manchester City, could not inspire Real who have now dropped 12 points on the road and have an uphill task if they are to dethrone double champions Barcelona.
"I can't fault the players as they did their job," said Mourinho.
"We didn't deserve to lose the three points but we lost against a team that gave everything and had the whole week to prepare for the match.
"It is always difficult in Pamplona and I don't think many teams win here. It is a match that you win by being solid defensively and scoring.
"We had chances but didn't take them and it is three points lost and our second league defeat of the season."
Barcelona made it a record-equalling 15th consecutive league win with a 3-0 victory at Hercules on Saturday to match the long-standing record of Alfredo di Stefano's great 1960-1961 Real Madrid side.
Real were under pressure to respond and had a star-studded substitutes' bench with Xabi Alonso, Kaka and new signing Adebayor ready to be called into action.
Adebayor had to wait for his debut with French forward Karim Benzema retaining his place after scoring the winning goal in his last two matches.
Osasuna drew 0-0 with Real in the corresponding fixture last season and squandered the best chance of the first half on 32 minutes.
A ball from the left picked out Walter Pandiani but the Uruguayan glanced his header over.
Two minutes later Real had their first real sight on goal with Benzema fizzing in a low shot that goalkeeper Ricardo Lopez did well to save at his near post.
Lopez then denied Cristiano Ronaldo with his legs in the 43rd minute as the two sides went into the interval at 0-0.
Ronaldo was Madrid's most dangerous player in the second half, firing one shot just wide and then seeing another drive blocked at the last minute.
However, Osasuna were ambitious going forward and took the lead on 62 minutes after a mix-up between Real defenders Raul Albiol and Ricardo Carvalho.
Camunas broke the offside trap and thumped his shot past Iker Casillas to delight the home fans.
Mourinho, who was quoted as saying that he wanted to return to manage in England on Sunday, responded with a triple substitution with Adebayor, Kaka and Alonso all coming on.
Adebayor had a half chance with a header, but it was Osasuna who should have made it 2-0 with Alvaro Arbeloa saving the visitors with an 84th minute block to prevent a certain goal.
Madrid lacked the imagination to open up a well-organised Osasuna side managed by former Real Madrid legend Jose Antonio Camacho.
In other matches, third-placed Villarreal closed to within six points of Real with a 1-0 win at Espanyol.
Italian striker Giuseppe Rossi, who recently signed a contract extension until 2016, scored his 12th league goal of the season on 44 minutes to decide the match.
It was only Espanyol's second league defeat at their Cornella-El Prat stadium and the Barcelona-based club stay three points behind fourth-placed Valencia, who have a game in hand against Racing Santander on Monday.
Under-fire Atletico Madrid coach Quique Sanchez Flores felt the pressure intensify as his side lost 2-0 at home to Athletic Bilbao.
Gaizka Toquero scored in each half, on 45 and 64 minutes, to down 10-man Atletico, who had Colombian defender Luis Perea sent off on 38 minutes for conceding a penalty, and sixth-placed Bilbao move five points clear of Atletico in the table.
Flores, who got the dreaded vote of confidence from the board this week, is under extreme pressure with Atletico, who are already out of the Europa League and Kings Cup, lying 10 points off the top four.