Elias Kachunga scored in the 71st minute and Moritz Stoppelkamp added his memorable long-range strike in the third minute of injury time in a 2-0 win which took Paderborn to eight points and top spot.
Bayern Munich, meanwhile, were unable to get the better of a Hamburg team under new coach Joe Zinnbauer playing out a 0-0 draw.
The reigning champions also have eight points from four games but are sitting fourth behind Paderborn, Mainz 05 and Hoffenheim on goal difference.
Bayern coach Pep Guardiola said his team struggled just days after a tough mid-week battle against Manchester City.
"After the Champions League match, it was tough to play," said Guardiola. "We have to keep on working hard."
Paderborn coach Andre Breitenreiter, who saw his team win their first home match in the top flight, said: "We just want to keep collecting points to avoid relegation. Now we can go to Munich next week with confidence."
The match also saw midfielder Stoppelkamp score from an estimated 83 metres out.
"I didn't know that I could even shoot that far," said the scorer.
Zinnbauer was delighted with his point against Bayern.
"Getting a point against Bayern is a big story. The guys showed they were willing to run, but there was more team spirit today. And the team deserved to celebrate with their fans," said Zinnbauer, whose team was the first to keep Munich scoreless this season.
Paderborn's time atop the league will last at least until Sunday as Mainz beat Borussia Dortmund 2-0 in Saturday's late game thanks to goals by Shinji Okazaki in the 66th minute and an own goal by Matthias Ginter in the 74th.
Mainz have eight points and Dortmund have six.
Bayer Leverkusen -- leaders coming into the weekend with seven points -- face VfL Wolfsburg on Sunday.
Hoffenheim claimed a 2-0 win at bottom club Stuttgart thanks to goals by Anthony Modeste after 15 minutes and Tarik Elyounoussi in the 84th.
Werder Bremen's streak of coming back from deficits to collect points was snapped as Augsburg won 4-2 at home.
Bremen jumped ahead through 19-year-old Davie Selke in the third minute. But Daniel Baier equalised after 14 minutes and Paul Verhaegh gave the hosts the lead in the 44th from the spot.
Franco Di Santo equalised for Bremen from the penalty spot in the 56th minute. But Tobias Werner gave Augsburg the lead again in the 76th minute and Tim Matavz added a fourth goal three minutes into stoppage time.
Schalke's struggles continued with a 2-2 draw at home in a hot-headed clash against Eintracht Frankfurt where two Schalke players and one Frankfurt player saw red.
Schalke, still hunting a first win this season, fell behind 2-0 at home after just 24 minutes following goals from Alex Meier and Marco Russ.
But Eric Choupo-Moting pulled a goal back in the 40th minute from a penalty. And the German-born Cameroonian striker set up Julian Draxler's equaliser in the 50th minute.
Kevin-Prince Boateng was sent off after 61 minutes while Draxler followed 11 minutes later with a red card.
Frankfurt went a man down for the final five minutes as Solodan Medojevic was shown his second yellow card.