Fluminense striker Fred holds the trophy following the 2-0 defeat by Cruzeiro.
Palmeiras has been relegated in the Brazilian league for the second time in 10 years after conceding a late equalizer in a 1-1 draw with Flamengo on Sunday.
Fluminense, meanwhile, celebrated the title it clinched a week ago, receiving the league trophy in front of its home fans in Rio de Janeiro despite a 2-0 loss to Cruzeiro at Engenhao stadium.
Palmeiras, the team with the most national titles and the defending Brazilian Cup champion, had its demotion to the second division sealed after Portuguesa drew second-place Gremio 2-2 in Sao Paulo later Sunday. After the draw with Flamengo, it needed Portuguesa to lose the match at its Caninde Stadium.
Victory escaped Palmeiras in Volta Redonda after former player Vagner Love scored in the 89th minute with a shot that deflected off a defender before going into the net. The eight-time Brazilian champion was demoted for the first time in 2002.
With two rounds left, Palmeiras is seven points behind Portuguesa, the first team out of relegation zone. It is 18th in the 20-team standings with 34 points from 36 matches. The bottom four clubs are relegated. Portuguesa, Bahia and Sport remain in danger, while Figueirense and last-place Atletico Goianiense had already been demoted.
Palmeiras is paying for focusing on the Brazilian Cup in the beginning of the year, when it rested regular starters for several matches under the command of World Cup winning coach Luiz Felipe Scolari. Palmeiras ended up winning the Brazilian Cup - its first major title since it won the 1999 Copa Libertadores - but the team's first victory in the Brazilian league came only in the seventh round.
Scolari eventually left after not improving the team's condition, and Gilson Kleina also was not able to get the team out of trouble after replacing the former Brazil coach.
Palmeiras opened the scoring on Sunday with a long-range shot by substitute striker Vinicius, but Vagner Love's late goal ended the team's chances for victory. Palmeiras had already allowed a late goal in the 3-2 loss that gave Fluminense the title last week, and in its previous match it only drew Botafogo 2-2 at home.
Players and club directors received violent threats as the team began to struggled, but there were no reports of violence early Sunday evening.
While Palmeiras fans agonized, Fluminense supporters rejoiced.
The team led by league-leading scorer Fred and former Chelsea playmaker Deco celebrated its fourth league title in front of its home fans and the league trophy was officially handed over to players. It was Cruzeiro which got the victory, though, with goals by Elber and Argentina playmaker Walter Montillo.
Before the match, top-ranked tennis player Novak Djokovic and former three-time French Open champion Gustavo Kuerten both scored in a charity football match at the stadium.
The exhibition was organized by Djokovic's Serbian countryman, Dejan Petkovic, who starred for several Brazilian clubs in the past decade. Former Brazil stars Zico and Bebeto were among the participants.
Also Sunday, playmaker Paulo Henrique Ganso came off the bench to make his debut with fourth-place Sao Paulo in the team's 2-1 win over Nautico at the Morumbi Stadium. Goalkeeper Rogerio Ceni scored Sao Paulo's winner by converting a second-half penalty kick.
Peru striker Paolo Guerrero scored one of the goals for defending champion Corinthians in its 2-0 win over Internacional. Fifth in the standings, Corinthians is focused on the Club World Cup in December.