Justin Edinburgh's first match in charge of Grays proved a real disappointment as the Blues were toppled by the Conference's bottom club and the new boss is now looking over his shoulder at a potential relegation battle.
The defeat leaves Grays just six points from the drop zone and Edinburgh faces a tough task to reverse the spiralling decline that has seen Grays slide down the table.
Edinburgh gave an immediate debut to his new signing, prolific 23-year-old striker Aaron O'Connor, from Unibond Division One Gresley Rovers but he made little impact, missing out on two opportunities that came his way.
Southport, who sacked manager Paul Cook in the build-up to the match and installed former Stevenage striker Dino Maamria and physio and ex-pro Steve Whitehall as caretaker made the better start to the match and took the lead after just two minutes when striker Ciaran Donnelly broke through the Grays midfield to the edge of the box and fired a crisp shot beyond the dive of Ashley Bayes.
Grays had plenty of possession but looked rather aimless in the final third, with defender Andy Sambrook going closest, though his shot was saved with some comfort by Paul Harrison.
Southport continued to have the whip hand and striker Tony Gray always looked a threat, finally delivering his side's second goal on 18 minutes after the visiting defence was carved open and he produced a great finish.
O'Connor's first moment of destiny arrived soon after when the ball fell to him following a deflection off the home side's Chris Lane but he was foiled by a one-handed save from Harrison.
Southport were quickly back on the attack and Mark Boyd caused consternation in front of Bayes with a shot from 25 yards that just went over.
Grays managed to keep their fired-up hosts at bay until half time but it took just two minutes of the second half for them to increase the lead when Carl Baker dispossessed two Grays defenders, dribbled into the area and scored from a tight angle.
To their credit Grays, who introduced Ashley Nicholls for Vincent Fernandez early in the half, kept going and skipper Jamie Stuart pulled a goal back on the hour mark, heading home Glen Poole's cross.
New signing Ben Harding got his chance on 63 minutes, coming on for John Turner, and Grays began to dominate. Nichols made a particular impact, though he spurned one glorious chance, as did O'Connor for the second time in the match.
Edinburgh's last throw of the dice was to introduce Sheku Kamara for Matt Bodkin for the last seven minutes but it was all to no avail and in the closing stages it was Southport who came closest to scoring, with Baker, substitute Sean Paterson and Donnelly also having chances.
The win lifted Southport off the bottom, but leaves Grays, who face Braintree at home in the Essex Senior Cup quarter-final on Tuesday, just eight places and six points above them.
Thanks to the Thurrock Gazette for the report.