Robert Earnshaw and Paul Anderson celebrate
Billy Davies' side beat struggling Reading 2-1, courtesy of goals from Paul Anderson and Robert Earnshaw.
But they had to hold out amid a dramatic finish, as Lee Camp made three outstanding saves – including a penalty stop to deny Brian Howard – to preserve a clean sheet.
That penalty incident had also seen Nicky Shorey sent off against his former club, after bringing down sub Jimmy Kebe in the area.
Jimmy Kebe pulled one back deep into injury time, but ten-man Forest held out for a win that kept them firmly in the top two, with leaders Newcastle - who now lead Forest by only two points - and third-placed West Brom set to face off at St James' Park on Monday evening.
An emphatic finish from Anderson capped off a flowing counter-attack to put the home side ahead after 11 minutes, following some fine work from Chris Cohen.
The midfielder had been sent racing clear by Earnshaw, before squaring unselfishly across the box to give Anderson a golden chance that he tucked away confidently.
Adam Federici then produced an outstanding close range save to deny Earnshaw a goal, after Anderson's perfectly flighted cross from the left had given the striker the chance to unleash an instant volley at the far post.
But Earnshaw, who had also repeatedly come close to breaking the offside trap, was not to be denied a goal and, after Forest had put the visiting defence under pressure again, he made it 2-0 in the 41st minute.
Raddy Majewski's twisting run took him to the edge of the box, before he fed a pass through a gap in the Reading defence to pick out the striker, whose predatory instincts saw him prod the ball home from close range.
And it could have been 3-0 in first half injury time as Dexter Blackstock was sent powering through the centre, only to slide a placed pass narrowly the wrong side of the post with Federici beaten.
Unsurprisingly, given Forest's domination in midfield, Reading made a half-time change with the experienced figure of Brian Howard brought on to replace Kalifa Cisse.
And the move did spark some life into Reading, who were only denied a goal by two utterly outstanding stops from Lee Camp, both to deny Gunnar Thorvaldsson.
The Icelandic striker first saw the keeper stretch out a leg to kick away his diving header and then, less than a minute later, stretch to claw away a second effort that was rising under the crossbar.
But the keeper was not finished with his heroics, as he then denied Reading a golden opportunity to force their way back into the game from the penalty spot.
Referee Darren Deadman had little choice but to point to the spot after Nicky Shorey had hauled down sub Jimmy Kebe, although his subsequent red card only rubbed salt into the wounds.
But, while Howard struck his penalty firmly enough, Camp read it well, diving low to his left to palm the ball solidly away.
Kebe glanced home a consolation goal deep into injury time, connecting with a cross from Howard, but it was not enough, as the final whistle blew seconds later.