The win puts the team from Valencia back into fourth position on 35 points.
Former Espanyol player Valdo was the quickest to react to a loose ball to finish well on 24 minutes and give Levante the lead.
In the second-half, Espanyol pressed for the leveller with Slovakian winger Vladimir Weiss, on loan from Manchester City, looking particularly dangerous.
However it was Arouna Kone who nearly doubled the lead for Levante on 68 minutes only to be denied by a fine save by Francisco Casilla.
Six minutes later substitute Kalu Uche leapt highest to head in a Joan Verdu floated free-kick, after Weiss had been fouled on the right wing, to level the game.
At 1-1, Espanyol looked the likely winner and Uche shot just wide with six minutes remaining.
However, Ruben struck a last minute free-kick that took a slight deflection to take the three points for Levante.
It was the first win in nine league games for a Levante side who started the campaign brightly and briefly challenged Real Madrid and Barcelona at the top of the table.
Malaga came from behind to beat bottom club Real Zaragoza 5-1, for whom Carlos Aranda grabbed an early lead, to move into fifth place, one point behind Levante.
Seba Fernandez headed the equaliser on the stroke of half-time before an own-goal from defender Paulo da Silva, a Martin Dimichelis header, as well as strikes from Isco and Salomon Rondon sealed victory for a rampant Malaga.
The defeat leaves Zaragoza stranded at the bottom, 11 points from safety.
Also on Saturday the points were shared in 1-1 draws between Racing Santander and Sporting Gijon and Real Betis and Getafe.
David Barral gave Sporting the lead with an unstoppable shot from a free-kick in the first period before Uruguayan forward Christian Stuani hit a second-half penalty to earn the home team a point.
The result leaves both teams in the bottom three with Racing on 24 points, two points from safety and three ahead of Sporting, who have a six-point lead over Zaragoza.
Jorge Molina put Betis ahead in the 51st minute only for an own goal from Chechu Dorado to even up the game three minutes later.
On Sunday Real Madrid go to local rivals Rayo Vallecano to defend a 10-point lead over rivals Barcelona who have a difficult game away to Atletico Madrid.
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