Albion Rovers moved to the top of the table with a 2-0 win over Berwick at Shielfield.
It was Rangers’ third defeat in a week and was not the ideal preparation to take into their Scottish Cup quarter-final tie against Hibernian at Easter Road next weekend.
Albion arrived having lost their previous four matches.but this win saw them leapfrog both Arbroath and Queens Park to the summit.
Rangers meanwhile have now dropped to seventh, although they remain six points off the fourth play-off place.
Early in the first half Berwick keeper Billy Bald made two good saves, one from a corner and the other from Michael Dunlop, before Ross Drummond cleared another shot off the line.
Kerr Young glanced a header wide from a Lee Currie free kick and then Lee Currie blasted over from the left side of the box.
After 25 minutes Edward Ferns was unlucky with a first time shot which hit the top of the cross bar after a fast-breaking move and cut-back down the left, but in general this was a game between two teams out of form and lacking in confidence.
The deadlock was broken after 33 minutes when Albion took the lead from a corner, Ross Dunlop sending in a looping header after the home defence failed to clear the danger.
Almost right on half-time Colin Cameron struck the post for Berwick with a low shot from outside the box, but at half-time it remained 0-1.
Berwick started brighter in the second half without being threatening in front of goal and Albion doubled their advantage after 60 minutes when Mark McGuigan ran onto a long ball through the middle. Jonny Fairbairn failed to get in a challenge and McGuigan slipped the ball past Bald.
Two minutes later Ferns was clean through on the right but pulled his shot wide of the goal.
Rangers made a double substitution to try and turn the tables and although they had two late efforts blocked in the box it looked like too many of the players had one eye on next week’s cup tie against Hibs.