Champions League holders Real Madrid fell to a 3-1 home defeat by AC Milan on Tuesday in the group stage with striker Kylian Mbappé unable to find the net again.

The 25-year-old France captain has scored once in his last six matches for Madrid across all competitions, including three losses for Los Blancos.

Malick Thiaw headed the Italian side ahead before Vinicius Junior levelled from the penalty spot for the hosts.

Alvaro Morata struck against his former side to restore Milan's lead before the break and Tijjani Reijnders netted the third to secure Milan's victory.

Madrid were unable to bounce back strongly from the 4-0 thrashing by Barcelona in late October, their last outing after Saturday's La Liga match at Valencia was postponed because of devastating floods in the east of Spain.

Players from both sides wore t-shirts before the match reading "We are all Valencia" while in one stand a giant Valencia regional flag was unfurled for a minute's silence.

In the 90 minutes that followed, Paulo Fonseca's Milan, seventh in Serie A, outclassed Madrid.

"We are going through a period when our opponents are punishing us a lot and we have to keep working so that this doesn't happen again," Madrid defender Lucas Vazquez told Movistar.

Los Blancos have let in nine goals in their last three home matches.

"We have to be worried, the team's not giving a good account of itself," said Madrid coach Carlo Ancelotti.

"The team is not compact, we have to be more compact, more organised, we've let in a lot of goals," he added. "We're not well organised on the pitch, and we have to work on that."

Milan have won the competition seven times, behind only record 15-time champions Madrid, but have not reached a final since 2007, when Ancelotti led them to the trophy.

This victory harked back to their glory days and Fonseca praised his team's bravery.

"The players came here with courage, didn't have any fear – in the first half we created plenty, and in the second half we were on the back foot, but we fought together," said the Portuguese coach. "We definitely deserved to win."

Ancelotti, who won the Champions League twice as a player and then twice as a coach with Milan, only made one change from the Clasico humiliation, bringing in Luka Modric for Eduardo Camavinga. (AFP)