Former Ipswich loanee Marlon Harewood returned to hit two goals to earn current club Forest a thrilling 4-3 success at Portman Road.
Town let slip a two-goal lead and this result may well have ended their chances of a play-off spot, and cemented Forest's own place.
Ipswich started well and Tommy Miller fired them ahead from close range on 14 minutes.
He then made it 2-0 with a twice-taken penalty on 26 minutes, given for a foul by Andy Reid on Pablo Counago. Darren Ward saved initially, but he was ruled to have moved off his line too early.
Amazingly Forest led just seven minutes later as within a minute substitute John Thompson fired in a low drive.
Harewood side-footed home on 29 minutes before his blocked effort was driven back by Thompson and deflected in off the unfortunate Richard Naylor.
Ipswich were shell-shocked and could have been further behind by the break, had Andy Marshall not saved from Gareth Williams and ex-Town striker David Johnson.
The second half proved just as lively, with Ipswich drawing level on the hour when Marcus Bent netted from Jim Magilton's superb long ball.
Marshall saved to deny Johnson, before Forest had two good shouts for penalties rejected after claims for fouls on Johnson and Darren Huckerby.
Forest scored what proved to be the winner 15 minutes from time, when Harewood rose to glance in Reid's free kick.
Reid saw another set-piece end on the roof of the net, before Magilton blazed a good chance over from 20 yards.
Bent and Counago both failed to trouble Ward from decent positions, before Reid chipped wide from a Huckerby pass.
Ipswich pressed for a late equaliser in the three added minutes, and saw a Magilton shot deflected wide and then a Jermaine Wright volley fly straight at Ward.