The Falcons were on target for their third straight win, which would have held them in second spot, but could muster just two goals after the first quarter, losing 9.11 (65) to 6.12 (48) in a Leederville Oval twilight clash.
The loss dropped the Joondalup-based side to fifth on the league table.
The Lions held West Perth � who debuted 18-year-old Sam Rotham � goalless in the second term, as they fought back to within five points at half-time.
The home side took the lead in a five-goal third term, before the visitors suffered their second goalless quarter in the final stanza.
It was a disappointing result for Falcons coach Bill Monaghan who, on the night, overtook WA Football Hall of Fame member Stan Heal�s 63-year-old record for games coached at the club.
Prolific Falcons ball winner Shane Nelson gained a match-high 43 disposals, but the side could not maintain scoreboard pressure, with spearhead Michael Lourey restricted to two goals.
Subiaco�s Brad Stevenson and James Garcia kicked three goals each as the game�s leading scorers.
West Perth faces Swan Districts in their annual Anzac Day public holiday clash in round six.