Queens created history by outplaying Rangers to record their first league win against the Ibrox team at Palmy in 50 years.
Goals from Kevin Holt and Gavin Reilly at Palmerston now leave the Ibrox side in danger of falling 12 points behind Scottish Championship leaders Hearts and all-but out of the race for automatic promotion.
And it does nothing to untangle the uncertainty surrounding manager McCoist's fate.
Reports emerged around 1.30pm suggesting the boss had handed in his notice, while sources later claimed his resignation offer - which could cost the club up to £1.4 million - had been knocked back by the Light Blues' cash-strapped board.
McCoist - under pressure following recent defeats to Hearts and Alloa - refused to answer questions as he arrived in Dumfries but did say he was "100 per cent committed" to the club.
As the 52-year-old took his place in the dug-out, he was praying for a victory that would have at least allowed him to look his critics in the eye.
But by the end of the match he was left looking on through the cracks in his fingers.
One faint 'Super Ally' chant was heard just after kick-off but it soon drifted into a hush.
If the Rangers players decided to put on a show of defiance on behalf of their manager, they hid it well.
It was a performance which highlighted all the negative aspects of McCoist's reign in charge.
A lacklustre tempo, an almost complete absence of creativity and some pretty naive tactics all combined to hand Queens the initiative.
A teasing cross from John Baird and a decent run and strike from Iain Russell were just the warning signs.
But Holt's 22nd-minute free-kick was another slap in the face for the beleaguered Ibrox boss.
The build-up saw Darren McGregor handle on the edge of his own box as he slipped trying to cut out Daniel Carmichael's cross for Reilly. The Rangers full-back was the only man standing in the way of Reilly and the visitors' goal and referee Andrew Dallas would have been within his rights to flash red.
But while Queens felt aggrieved when he only produced a yellow, they got the compensation they were after when Holt smashed a superb set-piece past Steve Simonsen into the top corner.
Rangers had only had one chance up until this point, a shot fired over Zander Clark's bar by Kenny Miller.
But Jon Daly then had a close-range header cleared off the line by Ian McShane before Bilel Mohsni could nodded over as Rangers went in search of a leveller.
McCoist hooked Dean Shiels after 45 anonymous minutes and threw on David Templeton, with the change briefly giving the Glasgow giants a new dimension.
Nicky Law's curling effort was pushed away by Clark but Miller wasted his chance from the rebound. The resurgence, though, did not last.
Lee McCulloch and Baird were both booked after a petty spat before the Rangers skipper almost gifted his foe Queens' second with a weak headed clearance. Baird had time to control the ball but fired his first-time shot wide.
But another blunder from McCulloch settled the game with 23 minutes left.
The 36-year-old failed to pick up Russell as Carmichael threw over a perfect cross and the young striker made the most of the space as he lashed the ball in off the post.
As the match drifted towards the close another chant of 'Super Ally' could now be heard loud and clear - this time from the ecstatic home support
A comprehensive win for Queens in front of a noisy 6,000 plus crowd which created a wonderful atmosphere inside the wonderful old stadium.Rangers had no answer to the trickery of Carmichael and the pace of Reilly. Our midfield with McShane and Kerr also laid the foundations for a famous victory.
They also had tremendous support from a resilient back four who gave nothing away despite intimidation from a Rangers team who were simply overwhelmed by a superb Queens team.
Queen of the South
- 01 Clark
- 04 Dowie
- 05 Durnan Booked
- 06 Higgins
- 03 Holt
- 17 Carmichael (Kidd - 88' )
- 08 Kerr
- 18 McShane
- 11 Russell (Paton - 92' )
- 09 Baird Booked (Lyle - 62' )
- 10 Reilly
- 12 Kidd
- 15 Paton
- 16 Dzierzawski
- 19 Lyle
- 20 Atkinson
- 22 Hooper
- 27 Kiltie
- 31 Simonsen
- 24 McGregor
- 06 McCulloch Booked
- 03 Mohsni Booked
- 23 Foster
- 07 Law
- 04 Aird
- 08 Black
- 22 Shiels (Templeton - 46' )
- 18 Miller (Clark - 58' )
- 09 Daly (Boyd - 58' )
- 02 Smith
- 11 Templeton
- 14 Clark
- 15 Boyd
- 16 Faure
- 20 Hutton
- 25 Robinson
Images courtesy of Colin Johnstone and his team at Palmy - www.qosfc.com