Back in familiar surroundings after winning five of their last six games on the road, the Lakers were unable to maintain any consistency against a team missing pivotal point guard Brandon Jennings through injury.
Earl Boykins scored a game-high 22 points off the bench for the Bucks, including four three-pointers, while guard John Salmons contributed 20 points and forward Ersan Ilyasova 17.
It was an inspirational all-round performance by the visiting team, who were playing only their second game since Jennings was sidelined for at least four weeks with a broken left foot.
"Each time we appeared to be teetering a little bit, we were able to make a series of big plays to extend the lead," Milwaukee head coach Scott Skiles said after his team improved to 11-16.
"If you're going to come into this type of place and beat this type of team, you're going to need those types of plays. We wouldn't have won the game without Earl tonight."
The Bucks, who were also without regular starters Corey Maggette and Drew Gooden due to injury, ended a run of six consecutive defeats at the hands of the Lakers.
All-Star guard Kobe Bryant was restricted to 21 points for the home team, who shot only 46 percent from the field on a forgettable night compared to Milwaukee's 51 per cent.
Spanish forward Pau Gasol had 15 points and 11 rebounds while Lamar Odom tallied 12 and 10 as Los Angeles slipped to 21-8 for the season.
"This game was a wake-up game of sorts for our team," Lakers coach Phil Jackson. "I told them I don't think they can play any worse than that.
"(In the second half) we stopped moving the ball, started playing individual basketball and the stand-around stuff started happening. Their defense was good, that made us do that too."
The Bucks, who had lost their previous three games, made a surprisingly strong start, twice leading by seven points before ending the first quarter 25-22 ahead.
Bench players Shannon Brown and Matt Barnes helped spark a Los Angeles fightback early in the second quarter before a sloppy spell left them trailing 50-46 at halftime.
The Lakers again clawed their way back, a Gasol fall-away jump shot tying the score at 63-63, before the Bucks ended the third quarter with four unanswered points and a 72-66 lead.
With a stunning victory in their sights and the Lakers being booed by sections of the sellout crowd, Milwaukee produced a rousing finish.
Reserve guard Boykins poured in a pair of three-pointers before an Andrew Bogut reverse layup with 4:26 left on the clock gave the Bucks a 13-point advantage - the biggest of the night.
Another Boykins three-pointer put the visitors up 92-77 before Bryant was ejected from the game for a second technical foul as Lakers fans streamed for the exits.
The humbled Lakers will face their biggest test of the season on Saturday when they host LeBron James and the Miami Heat in a Christmas Day showdown.
The Bucks, who ended Tuesday's game with a 21-7 run, are next in action on Thursday with a road game against the Sacramento Kings.