Nacho was able to beat the tough Valladolid defence in the 78th minute, scoring the only points Real Madrid would end up needing to secure the victory on Sunday evening, reports Efe news.
The 30-year-old defender's goal helped Real Madrid capitalise on the loss earlier this weekend by arch-rival Barcelona.
On Saturday, Valencia, playing at home, shut out Barcelona 2-0, opening the way for Real Madrid to overtake the Catalan club for the top spot in La Liga.
Following disappointing losses in their last two games, Valencia returned to the form they showed earlier this season, despite missing captain Dani Parejo to suspension and several other players to injury.
Real Madrid went into Valladolid's Jose Zorrilla Stadium on Sunday knowing that it had to take advantage of the stumble by Barcelona.
Valladolid coach Sergio Gonzalez's squad did an excellent job of executing his defensive strategy, allowing Zinedine Zidane's Real Madrid squad few opportunities to score.
Valladolid's goalkeeper Jordi Masip had to deal with just three shots on goal early in the match.
Nacho, however, managed to put Real Madrid on the scoreboard, while a goal by Valladolid forward Sergi Guardiola was disallowed by the referee.
After Barcelona's loss, the Blancos needed only a draw on Sunday against Valladolid to take sole possession of first place.
Real Madrid, however, left Jose Zorrilla Stadium with three points and the top spot in the Spanish league.
In the latest standings, Real Madrid are in the first place with 46 points; Barcelona hold second place with 43 points; Sevilla in third place with 38 points; Getafe in fourth place with 36 points and Atletico Madrid in fifth place with 36 points.
( With inputs from IANS )