Second Division Queen of the South took the scalp of Scottish Premier League Hibernian in the Scottish Communities League Cup at Palmerston Park.
Nicky Clark broke the deadlock when he tapped the ball in at the front post from only four yards out.
Gavin Reilly doubled Queens' lead later in the first half through a diving header from Danny Carmichael's cross.
The more illustrious visitors struggled, with Leigh Griffiths guilty of wasting what chances they had.
Hibs manager Pat Fenlon had gambled by resting several players, including club captain James McPake, for their first cup appearance since defeat to arch-rivals Hearts in the Scottish Cup final in May.
However, despite Griffiths hitting the bar with an early chance, it was Allan Johnston's in-form Queens who took control of the match.
And Clark, son of Queens assistant manager, former Hearts striker, Sandy Clark, broke the deadlock when he beat Sean O'Hanlon to connect with Carmichael's low cross.
Hibernian debutant Shefki Kuqi was presented with a chance to level but shot straight at keeper Lee Robinson, with Griffiths blazing wide with another chance.
The hosts then exposed Hibs down their left side again with right-back Chris Mitchell playing the ball inside Pa Kujabi to Carmichael.
The winger crossed and Reilly's diving header flew into the corner of the net from six yards.
Queens continued to dominate into the second half, with both Reilly and Clark going close.
Eoin Doyle came on for the largely ineffectual Kuqi, and the Irishman created two openings for Paul Cairney, but the midfielder could not capitalise.
David Wotherspoon forced a header goalward in injury time, but Robinson saved as the Donhamers progressed to the third round.
of the South
manager Allan Johnston
: "The first half, I thought we played some really good football. Maybe the second half, we never passed it as well, but I thought we were the better team, to be honest.
"We said to the boys before the game, you are playing against SPL players and it's up to you to raise your standards and see if you are good enough to play there.
"We'll get a lot of press and it's good for their careers."
Hibernian manager Pat Fenlon
: "I'm disgusted by that performance.
"We have let ourselves down and let down a fair few supporters who have travelled a long way.
"We just didn't treat it properly, we didn't get to the tempo we should have.
"They worked harder and I thought they were very good, they passed it when they had to and turned us round when they had to and just were better than us all round.
"It's about attitude and application when you come to places like this. If you don't apply yourselves properly, you will get turned over."
Full Time The final whistle is blown by the referee.
Short corner worked by Daniel Carmichael.
David Wotherspoon takes a shot. Save made by Lee Robinson.
Leigh Griffiths takes a shot from just inside the penalty box which clears the bar.
Unfair challenge on Chris Mitchell by Paul Cairney results in a free kick. Lee Robinson takes the direct free kick.
Daniel Orsi gives away a free kick for an unfair challenge on David Wotherspoon. Gary Deegan restarts play with the free kick.
Corner taken right-footed by William Gibson to the near post, Effort from outside the box by Daniel Orsi goes wide right of the target.
Paul Cairney produces a header from inside the area that goes over the crossbar.
Foul by Daniel Orsi on David Wotherspoon, free kick awarded. Direct free kick taken by Ben Williams.
Unfair challenge on Daniel Carmichael by Alan Maybury results in a free kick. The free kick is swung in right-footed by William Gibson, Jorge Claros makes a clearance.
Inswinging corner taken right-footed by William Gibson from the left by-line to the near post, clearance made by David Wotherspoon.
Tim Clancy concedes a free kick for a foul on William Gibson. Kevin Holt restarts play with the free kick.
Substitution Nicky Clark goes off and William Gibson comes on.
The ball is crossed by Chris Mitchell, Ben Williams makes a comfortable save.
Foul by Eoin Doyle on Derek Young, free kick awarded. Free kick taken by Lee Robinson.
Corner taken by Leigh Griffiths from the right by-line, Paul Hanlon produces a header from inside the area that goes over the crossbar.
Paul Cairney takes a shot. Chris Higgins gets a block in.
David Wotherspoon crosses the ball, Lee Robinson makes a save.
Free kick awarded for an unfair challenge on Paul Cairney by Daniel Carmichael. Gary Deegan restarts play with the free kick.
Substitution Eoin Doyle replaces Shefki Kuqi.
Mark Durnan gives away a free kick for an unfair challenge on Leigh Griffiths. The ball is swung over by Leigh Griffiths, Headed effort from deep inside the penalty area by Sean O'Hanlon goes harmlessly over the crossbar.
David Wotherspoon produces a left-footed shot from just outside the box that goes wide right of the target.
Chris Higgins gives away a free kick for an unfair challenge on Leigh Griffiths. Free kick taken by Leigh Griffiths.
Sean O'Hanlon concedes a free kick for a foul on Nicky Clark. Kevin Holt takes the free kick.
Jorge Claros gives away a free kick for an unfair challenge on Chris Mitchell. Chris Mitchell crosses the ball from the free kick right-footed from right wing, clearance by Shefki Kuqi.
Gavin Reilly produces a right-footed shot from close range which goes wide of the right-hand upright.
Inswinging corner taken by Leigh Griffiths from the right by-line played to the near post, Chris Higgins makes a clearance.
Paul Cairney gives away a free kick for an unfair challenge on Chris Higgins. Free kick taken by Lee Robinson.
Close range header by Nicky Clark goes over the bar.
Outswinging corner taken by Chris Mitchell.
Gavin Reilly takes the chance to get an effort at goal. Blocked by Sean O'Hanlon.
Unfair challenge on Chris Higgins by David Wotherspoon results in a free kick. Lee Robinson takes the direct free kick.
The referee blows for offside against Nicky Clark. Ben Williams takes the free kick.
Free kick awarded for a foul by David Wotherspoon on Chris Higgins. Lee Robinson takes the free kick.
David Wotherspoon challenges Daniel Orsi unfairly and gives away a free kick. Chris Mitchell takes the free kick.
Corner taken left-footed by Gary Deegan.
Leigh Griffiths takes a shot. Save made by Chris Mitchell.
Substitution (Hibernian) makes a substitution, with Alan Maybury coming on for Callum Booth.
Substitution David Wotherspoon replaces Pa Saikou Kujabi.
The referee blows his whistle to start the second half.
45:00 +1:01 Half time
Half Time The ref blows to signal half-time.
Pa Saikou Kujabi fouled by Gavin Reilly, the ref awards a free kick. Pa Saikou Kujabi restarts play with the free kick.
Tim Clancy gives away a free kick for an unfair challenge on Daniel Orsi. Direct free kick taken by Kevin Holt.
Unfair challenge on Shefki Kuqi by Chris Higgins results in a free kick. Leigh Griffiths has an effort direct from the free kick.
Daniel Carmichael provided the assist for the goal.
41:35 Goal scored
Goal - Gavin Reilly - Queen of S 2 - 0 Hibernian Gavin Reilly scores a headed goal from close in. Queen of South 2-0 Hibernian.
Derek Young challenges Jorge Claros unfairly and gives away a free kick. Free kick taken by Ben Williams.
Tim Clancy concedes a free kick for a foul on Daniel Orsi. Kevin Holt crosses the ball in from the free kick, Paul Hanlon makes a clearance.
Leigh Griffiths takes a shot from close in clearing the crossbar.
Effort from deep inside the area by Nicky Clark misses to the right of the goal.
Gary Deegan challenges Daniel Carmichael unfairly and gives away a free kick. Chris Mitchell takes the free kick.
Shefki Kuqi takes a shot. Save made by Lee Robinson.
Gavin Reilly is ruled offside. Free kick taken by Ben Williams.
Sean O'Hanlon challenges Nicky Clark unfairly and gives away a free kick. Chris Higgins restarts play with the free kick.
Free kick awarded for a foul by Daniel Orsi on Tim Clancy. Ben Williams takes the direct free kick.
Nicky Clark is ruled offside. Sean O'Hanlon takes the free kick.
Gavin Reilly is flagged offside by the assistant referee. Free kick taken by Ben Williams.
The ball is sent over by Daniel Orsi.
Daniel Carmichael challenges Callum Booth unfairly and gives away a free kick. Paul Cairney delivers the ball from the free kick right-footed from left wing.
Substitution Gavin Reilly joins the action as a substitute, replacing Derek Lyle.
Free kick awarded for an unfair challenge on Chris Higgins by Leigh Griffiths. Lee Robinson takes the direct free kick.
Free kick awarded for a foul by Paul Cairney on Kevin Holt. Lee Robinson restarts play with the free kick.
The offside flag is raised against Paul Cairney. Indirect free kick taken by Lee Robinson.
Leigh Griffiths takes a inswinging corner from the right by-line to the near post, clearance made by Nicky Clark.
Corner taken by Paul Cairney from the left by-line played to the near post, clearance made by Stephen McKenna.
Paul Cairney takes the inswinging corner, clearance made by Chris Mitchell.
Daniel Carmichael provided the assist for the goal.
12:04 Goal scored
Goal - Nicky Clark - Queen of S 1 - 0 Hibernian Nicky Clark fires in a goal from close range to the bottom right corner of the goal. Queen of South 1-0 Hibernian.
Close range strike by Paul Hanlon goes over the bar.
Gary Deegan gives away a free kick for an unfair challenge on Stephen McKenna. Chris Mitchell takes the direct free kick.
Nicky Clark concedes a free kick for a foul on Paul Cairney. Free kick taken by Paul Cairney.
Sean O'Hanlon concedes a free kick for a foul on Nicky Clark. Derek Young takes the free kick.
Callum Booth delivers the ball, Long range effort by Tim Clancy goes over the bar.
Inswinging corner taken by Chris Mitchell, comfortable save by Ben Williams.
Callum Booth challenges Derek Lyle unfairly and gives away a free kick. Free kick crossed right-footed by Chris Mitchell from left channel, clearance made by Sean O'Hanlon.
Unfair challenge on Paul Cairney by Kevin Holt results in a free kick. Paul Cairney produces a shot on goal direct from the free kick.
The ball is sent over by Daniel Carmichael, Ben Williams makes a clearance.
The offside flag is raised against Shefki Kuqi. Stephen McKenna takes the free kick.
The referee starts the match.
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