Having beaten their opponents by the same scoreline in November, Elisha Levy’s team were expected to secure a comfortable win, but they were given a lesson in finishing by a ruthless Albanian side who ended a run of three consecutive defeats.
Israel fell behind midway through the first half when Armando Sadiku silenced home fans at the Samy Ofer Stadium in Haifa, firing a low shot past David Goresh.
Sadiku doubled the lead on the stroke of half-time, chesting down a high ball before rifling the ball into the bottom corner.
And there was no way back for Israel 20 minutes from time when the visitors broke to leave Ledian Memushaj with a simple task of slotting home from inside the penalty area.
Israel coach Elisha Levy said: "Until 2-0 we played well and were organised, then I took more risks and we lost our way.
"They did to us here exactly what we did to them there. I didn't think we could lose like this at home but that's football and we must look ahead."
The win sees Albania leapfrog Israel on goal difference, seven points behind Spain and Italy who both won.
Israel return to action on September 2 when they host Macedonia.
ISRAEL: David Goresh, Eli Dasa, Shir Tzedek, Bibras Natcho, Eran Zahavi (capt), Almog Cohen, Lior Rafaelov, Taleb Twatha, Ben Sahar, Eytan Tibi, Eyal Golarsa. Subs not used: Danny Amos, Omri Glazer, Omer Danino, Daniel Einbinder, Etey Shechter, Manor Solomon, Yossi Benayoun, Gidi Kanuk, David Keltjens, Idan Vered, Beram Kayal