Real Madrid welcomed Valencia to the Bernabeu on Saturday needing all three points to realistically remain in the La Liga title race.
Valencia were two goals ahead after 26 minutes, however, with Paco Alcacer and Javi Fuego both on the scoresheet.
Cristiano Ronaldo had the chance to make it 2-1 from the penalty spot late in the first period, but the Portuguese was denied by Diego Alves.
Real Madrid did find the back of the net in the 56th minute when Pepe headed home from close range. Isco made it 2-2 in the latter stages, but Los Blancos could not find a winner.
As it stands, they are four points behind leaders Barcelona with just two games remaining.
Read how it all unfolded in Sports Mole's minute-by-minute live commentary of the action below.
REAL: Casillas; Arbeloa, Pepe, Ramos, Coentrao; Kroos, Isco, James; Bale, Hernandez, Ronaldo
VALENCIA: Alves; Barragan, Mustafi, Otamendi, Gaya; Fuego, Gomes, Parejo; Piatti, Alcacer, Feghouli