The Panthers took the lead after just 24 seconds but the defending league champions responded with four unanswered goals to lead 4-1 at the end of the first period.
The Panthers reduced the gap to a single goal in the second, thanks to Jonathan Weaver and Kelsey Wilson, but captain Adam Keefe got what proved to be the winner early in the third to blow the race for the league title wide open.
Jordan Fox later scored a powerplay goal for the Panthers but it was too little too late.
"It's a massive result, there's no doubt about that," coach Doug Christiansen said.
"We're still in second place, but had we lost last night, we would have been six points back and our destiny would have been out of our own hands since we only play Nottingham two more times.
"But now we're two points back, we've got a bit of momentum. The guys played great, really stuck to the game plan and showed some character coming back from an early deficit."
On Sunday Nottingham travel to arch rivals Sheffield, while the Belfast Giants are on the road again to face Coventry Blaze for their second away game of the weekend.
Christiansen said he expects a tough game but the team know what is ahead of them.
He said: "You're only as good as your last game so this morning we're pretty good and we need to make sure that tonight we take care of Coventry Blaze because they are a very very good team at home."