Darian MacKinnon, making his debut for the hosts after joining on loan from Hamilton Academical, netted a double in the first half but his efforts were cancelled out by Nicky Clark and Paul Burns. Gavin Reilly won it for the visitors with a second-half brace.
Forfar Athletic remain a point behind Queens after beating Angus rivals Brechin City 1-0 at Station Park thanks to Martyn Fotheringham's 21st-minute strike.
Two goals in three first-half minutes gave Arbroath a 2-0 win over East Fife at Gayfield. Steven Doris opened the scoring after 26 minutes and Derek Holmes added the second.
Stenhousemuir defeated Alloa Athletic 2-0 at Recreation Park. Darren Smith put the visitors ahead midway through the second half and former Alloa captain Brown Ferguson sealed the points with a late penalty.
Albion Rovers made it two wins in a row with a 2-1 success at home to Stranraer. Jason Crooks got his first goal for Rovers early in the second half. Chris Aitken equalised but Mark McGuigan scored the winner with 10 minutes remaining.