Key Moments
The London club's hopes of securing a place automatically for the European Cup knockouts were dealt a blow as their Italian opponents came from behind to win in their home stadium.
Each club entered this fixture with the same records in the league phase of this year's competition, having won, tied one, and lost to sit on ten points.
For extended periods there was not much to separate them in this contest too, even though Chelsea went ahead in the first half when Joao Pedro turned in the captain's cross.
But Atalanta consistently appeared a threat going forwards, with former Premier League attacker causing issues for the defence.
James shot wide in the second half but the home team upped the pressure and justly levelled when ex-West Ham striker Gianluca Scamacca a cross.
The winger drove a powerful shot straight at the goalkeeper but they secured the winner late on when the Chelsea defence backed off Charles de Ketelaere, who took full advantage with a powerful shot.
The visitors tried to salvage a point in stoppage time but a brilliant stop by Marco Carnesecchi kept out Pedro.
The final score means Chelsea slip out of the automatic qualification places—the spots that qualify automatically for the knockouts—to 11th with two group stage fixtures remaining.
Atalanta, in contrast, leap up to third place, three points clear of the Londoners.
This was a hugely frustrating outcome for Chelsea as even a point was keeping them in a strong position to achieve the top eight finish they need to bypass the uncertainty of the play-offs.
But they lacked concentration in their defensive duties with seven minutes remaining and Atalanta seized the moment.
The Italians are in rich vein of form at the moment so this was always going to be a challenging test for the visitors, but they will be frustrated to be departing with no points after taking the early advantage.
But the bigger picture is that this extends Chelsea's concerning run of form in all tournaments.
Since defeating Barcelona 3-0 at the close of November they are now winless in their last four games.
Chelsea boss Enzo Maresca enacted five changes for this match as he persisted with his run of moving players in and out of the starting lineup.
The rotations here came after he implemented the identical amount for the loss to Leeds United and six for the tie with Bournemouth prior to the trip to Atalanta.
The coach will see squad rotation as essential as he tries to handle players' fitness and compete both at domestically and abroad, but he maintained the key nucleus of players remains the same for important fixtures.
"I think tonight [in] the first XI we had eight or nine players who featured against Tottenham, FC Barcelona, and Arsenal," he said.
"If you look at the five changes that we did compared to Bournemouth it may be a change but it is the same eight or nine players playing in that match.
"The players who took to the field this evening are the ones playing almost all the games."
Chelsea's next Champions League game sees them host the Cypriot side on Wednesday, 21 January (20:00 GMT).
The Italian team, meanwhile, host Athletic Bilbao at the same time.
A passionate gamer and writer with over a decade of experience in competitive gaming and content creation.