Harry Kane had given a youthful England line-up a fifth minute lead from the penalty spot after Raheem Sterling was bundled over.
However, the hosts hit back within four minutes, via defender Jakub Brabec with a close-range finish from a corner.
Czech Republic dramatically clinched the win in the 85th minute when an unmarked Zdenek Ondrasek.
The result ends England’s remarkable qualifier record of 43 matches unbeaten, dating back exactly 10 years and one day.
England remain top of the group and will still qualify on Monday if they beat Bulgaria and Kosovo fail to beat Montenegro.
It was a poor display from the Three Lions who had more possession but only seven shots compared to Czech Republic’s 17.
England boss Gareth Southgate took responsibility for the defeat, having tried a 4-2-3-1 fort he first time in two years with Mason Mount at number 10.
“I always have to accept responsibility. We tried something to make ourselves a bit more solid without the ball, and that didn’t happen,” Southgate said.
He added: “Clearly that was not a night that we wanted to be a part of in terms of that record.
“We didn’t play well enough. We conceded possession of the ball too cheaply, particularly in the first half we didn’t create enough chances.
“Second half we had some good chances that we didn’t take and throughout the night we were too open out of possession.
“Some of that was because of giving the ball away.”