Oxford United's Kane Hemmings scored an 88th minute winner to end MK Dons' six match undefeated streak at the Kassam Stadium.
With the game heading towards a stalemate, Hemmings' got a touch on Rob Hall's cross to divert it past David Martin for the only goal of the game.
It could have been worse for Dons though, after Darren Potter was sent off in stoppage time as he gave away a penalty in fouling Hall, but Martin would deny Chris Maguire from the spot.
At an arctic Kassam Stadium, Dons boss Robbie Neilson has made four changes to the side which started on Tuesday night against Oldham. Ed Upson returned to the side, playing alongside Stuart O'Keefe and Darren Potter. Top scorer Kieran Agard drops to the bench, with Nicky Maynard, Chuks Aneke and Harvey Barnes returning to the starting line-up.
While it was a fairly even opening 15 minutes, Dons had two great opportunities to take the lead against an Oxford side who had won seven of their last nine in all competitions. Quick feet from Barnes saw him skip past Phil Edwards to find Aneke in the centre, but after a clever shimmy, saw his strike saved by keeper Simon Eastwood. And after good work from Maynard and George Baldock, O'Keefe blasted his close range effort well over the top when he should have at least worked the keeper.
With just two points and one league position separating the sides, it was shaping to be a very even encounter. Oxford's Toni Martinez, making his Kassam Stadium debut, twice came close to opening the scoring for the home side, first firing just wide before bringing an excellent save from David Martin, who had to fly to his left to keep out a well-struck volley.
It was more of the same in the second half. Rob Hall, the pantominme villain for MK Dons fans, had his every touch booed but came close when his cross had to be tipped over by Martin.
Much of the focus though would be on referee Trevor Kettle, who stole the show with a series of strange decisions, including dishing out a yellow card to Ryan Ledson for refusing treatment from his physio.
The stop-start nature of the second half prevented any real flow to the game, and thus chances were half at best. Paul Downing and Joe Walsh looked solid against the Oxford front line, while it was the same story at the other end for Maynard and his replacement Kieran Agard.
But with two minutes to go, Oxford would finally break the deadlock. Hall's trickery would allow him to cut inside onto his left foot to cross, and Kane Hemmings got a deft touch on it to beat Martin at the far post.
Worse was to come though when Darren Potter fouled Hall as he shaped to cross, not only giving away a penalty, but also a red card for the skipper, who picked up his second yellow. Martin though would deny Chris Maguire from the spot to save some face.
The result sees Dons remain in 14th ahead of their trip to Bury on Valentine's Day.
Referee: Trevor Kettle
Attendance: 9,179 (1,350)
Oxford United: Eastwood, Lundstram, Nelson, Martinez (Hemmings 72), Sercombe (McAleny 72), Maguire, Edwards, Hall, Ledson, Johnson, Dunkley
Subs not used: Stevens, Skarz, McAleny, Ruffels, Rothwell, Raglan
MK Dons: Martin, Baldock, Downing, Walsh, Williams, Potter, Upson, O'Keefe, Barnes (Ngombo 90), Aneke (Muirhead 78), Maynard (Agard 71)
Subs not used: Nicholls, Ngombo, Bowditch, Brittain, Tilney
Booked: Walsh, Ledson, Dunkley, Barnes, Potter, Williams, Maguire