Hasenhuettl endured a horror return to Ingolstadt where his RB Leipzig side lost 1-0.
Leipzig, who have an average age of 23, had kept star-studded Bayern off the top of the German league table for three weeks, setting a new record of 13 games unbeaten for a team in their first Bundesliga season.
But Saturday's shock 1-0 defeat at Ingolstadt, who had been bottom before kick-off, allowed Bayern to cut the three-point gap with a 5-0 win at home to Wolfsburg and go top of the table on goal difference.
Hasenhuettl, 49, who has been tipped as a possible replacement for Arsene Wenger at Arsenal, endured a horror return to Ingolstadt, who he left in May.
Brazilian defender Roger scored Ingolstadt's first-half winner with a header from a set-piece.
"We didn't play well in the first half. Defeats always hurt, it doesn't matter against who," said Hasenhuettl, whose side battered the Ingolstadt goal with 13 shots, to the hosts four, but could not score.
"We allowed the opponent to force their own game on us, we had little influence and didn't show enough courage.
"We were better after the break, but we couldn't make our 300 percent (more shots) count. The ball didn't want to go in.
"This is a set back, but we can handle it."
This was only Ingolstadt's second win of the season.
The Bavarian strugglers had Australia striker Mathew Leckie sent off on 94 minutes for two yellow cards in quick succession, but his team held on and the win took them off bottom leaving Darmstadt, who lost 1-0 at Freiburg, last.
"The team did exceptionally well, they followed the plan exceptionally well," said coach Maik Walpurgis, who used his replacement goalkeeper for the last 30 minutes after injury to Danish shot-stopper Martin Hansen.
"We had two good goalkeepers and certainly the necessary luck in the second half."
Both Bayern and Leipzig have 33 points with Germany's top two clubs set to meet in Munich on December 21 in a pre-Christmas showdown.
Both clubs are six points ahead of nearest rivals Hertha Berlin, who suffered a shock 1-0 home defeat to Werder Bremen after Germany striker Max Kruse scored the first-half winner.
Bayern had no such problems as they hammered strugglers Wolfsburg with Robert Lewandowski netting twice and Thomas Mueller ending his goal drought in the Bundesliga having gone 999 minutes without scoring.
The victory came without both first-choice centre-backs as Jerome Boateng was on the bench with a shoulder injury and Mats Hummels was ill.
"Our performance was good," said Bayern coach Carlo Ancelotti, who again used a 4-2-3-1 formation having used a 4-3-3 in Tuesday's 1-0 Champions League win at home to Atletico Madrid.
"We had good control after it was 1-0, we can play both systems, but the team feels better with the 4-2-3-1.
"I am very happy for Thomas. The goal is good for him, he always does a good job and works hard for the team."
To further help Bayern's cause, they are the only side in the top seven to have picked up three points this weekend.
Defeat leaves the 2015 German Cup winners Wolfsburg on the verge of the bottom three.
"Bayern deserved the win," admitted Wolfsburg's coach Valerien Ismael, who again left out want-away German forward Julian Draxler.
"When you travel to Munich, you need to be strong in your head and have a lot of self-confidence in your luggage.
"They showed their domination and at the moment Bayern Munich is not our benchmark."
It was a humbling return to the Allianz Arena for Wolfsburg's ex-Bayern forward Mario Gomez.
"It's brutal. It's depressing when things really get going (for Bayern) and after that it's obviously very difficult," said the Germany striker.