The Magpies revived their hopes for 2013 and bundled the Bombers out of the top four, winning 20.13 (133) to 7.12 (54) in the first Sunday twilight clash between the powerhouse clubs.
It was a brutal on-field blow to the Bombers as they prepare for another week in the spotlight after receiving ASADA's interim report into the club's 2011-12 supplements program.
Collingwood rediscovered its manic defensive pressure, out-tackling the Bombers 81-51 and using that as a springboard for its third win in four games.
The Bombers were stunned by the Magpies' approach right from the opening bounce, conceding five unanswered goals in the first quarter and never recovering.
While Essendon is confident it will be allowed to play finals this season, the crucial double chance could now be out of reach after Fremantle moved into fourth spot.
Collingwood midfielder Luke Ball was superb in his return, setting the defensive tone early and finishing with 22 possessions and seven tackles.
Harry O'Brien (27 and eight marks) and Heath Shaw (18 and eight tackles) were also pivotal in the slippery conditions, while Travis Cloke booted five goals.
Sunday's match became spiteful at times, with O'Brien and Brendon Goddard coming to blows twice in the second quarter.
Essendon captain Jobe Watson, who was clearly his team's best player, was also booed by the Magpies' faithful in his return from a broken collarbone.
The Brownlow medallist fought a lone hand in the midfield, racking up 31 possessions (15 contested).
Coach James Hird praised his captain, but said his team had failed to match their more committed opponents.
"We just didn't compete enough around the contest and get dirty enough I think in the way we played the game," he said.
"We allowed 62 inside 50s to 45, and quality forwards if they get a lot of ball they'll hurt you.
"You don’t throw everything out after one or two games.
"We've played some really good football, but our last two weeks haven't been great.
"We'll back up next week, we'll play the West Coast Eagles and we'll play well."
The Bombers were handicapped by a hamstring injury to Courtenay Demspey, who was substituted in the first quarter.
With key position player Michael Hurley also missing, the Bombers struggled to find a forward target, with Scott Gumbleton and Tom Bellchambers well held.
Jake Carlisle was forced to play in defence, with Magpies forwards Ben Reid and Cloke combining superbly all day.
Reid booted three goals, while Jamie Elliot (three) and Jarryd Blair (two) were also threatening in a performance that could launch a revival for the Magpies just in time.
COLLINGWOOD 5.3 8.6 14.9 20.13 (133)
ESSENDON 0.2 2.4 5.8 7.12 (54)
Collingwood: Cloke 5, Elliot 3, Reid 3, Blair 2, O'Brien, Ball, Beams, Lynch, Pendlebury, Macaffer, Sidebottom
Essendon: Kommer, Bellchambers, Melksham, Hardingham, Goddard, Dell'Olio, Gumbleton
Collingwood: Ball, Sidebottom, Shaw, O'Brien, Elliot, Pendlebury, Swan
Essendon: Watson, Heppell, Ryder, Goddard
Essendon: Dempsey (hamstring)
Collingwood: Tyson Goldsack substituted out for Josh Thomas in the fourth quarter
Essendon: Courtenay Dempsey (hamstring) substituted out for Leroy Jetta in the first quarter
Umpires: Rosebury, Donlon, Kamolins
Official crowd: 69,821 at the MCG