In suitably searing 40 degrees temperatures, the wily Italian appeared to deliberately drive his young rival wide on lap seven of the race, and -- sensationally -- kick out at the Spaniard's Repsol Honda.
Marquez lost control and crashed, later retiring. Rossi went on to finish third.
The Movistar Yamaha rider was given three penalty points on his race license by Race Direction, and crucially will start the final race of the season in Valencia from the back of the grid, perhaps fatally wounding his dreams of a tenth title.
Jorge Lorenzo, who finished second in Malaysia behind Repsol Honda's resurgent Dani Pedrosa, is now just seven points adrift of the lead.
The deteriorating relationship between Marquez and Rossi had been thrust into the spotlight following the close fought Australian MotoGP last weekend. Marquez had dueled with Rossi throughout the race, before also beating Lorenzo to the flag.
At Thursday's pre-race press conference in Sepang, "The Doctor" implied that Marquez was helping Lorenzo. "Mainly, I think, his target is not just to win the race, but also to help Lorenzo to go far and take more points from me," he said, to bemused laughter from the Honda rider.
"I think from Phillip Island it's very clear that Jorge has a new supporter, that is Marc," Rossi continued.
But the war of words had escalated still further when Rossi accused Marquez of acting "like a child".
"He is angry at me for a personal matter," he claimed. "Although he never said it, he thinks that in Argentina I made him crash; and then at Assen he is still thinking about the last chicane, in his head he feels he should have won that race.
"Since then he has been angry and thinking like a child: 'I do not win, but you do not win either'."
Marquez had scoffed at the suggestion he was helping his compatriot: "Of course not," he told reporters. "I did my race, and in fact if I wanted to help Lorenzo I wouldn't pass him on the last lap and push to the limit. I don't know why they say [that]."
The verbal jousting spilled dramatically onto the track from the outset of the Malaysia race.
Pedrosa took an early lead, with Lorenzo in tow after the Malaga man had passed both Rossi and Marquez by lap three. A fierce and spectacular battle then began between the current world champion and the man American rider Colin Edwards dubbed 'The Goat' -- the Greatest of all Time.
In corner after corner Rossi and Marquez and Rossi swapped places with increasingly daring and risky moves, at times millimeters apart.
At one point Rossi appeared to gesture to the Honda rider, waving to him as Lorenzo and Pedrosa increased their lead over the pair. The battle grew increasingly aggressive, with neither willing to cede ground at speeds of up to 200mph (320kph)
Then, on turn 14 of lap seven, Rossi appeared to deliberately slow down and push Marquez wide, clearly looking at the 22-year-old as he did so, and appearing to kick out at his bike. Marquez was unable to stay in the saddle, spinning off the track. Clearly fuming, he remounted, but then rode into the pits, and straight into the garage.
Rossi was unapologetic, and blamed Marquez. "Marquez knows it wasn't red mist that caused the incident. It's very clear from the helicopter footage that I didn't want to make him crash, I just wanted to make him lose time, go outside of the line and slow down, because he was playing his dirty game, even worse than in Australia."
The 36-year-old denied he had kicked the Spaniard. "When I went wide and slowed down to nearly a stop, I looked at him as if to say 'what are you doing?'. After that we touched. He touched with his right underarm on my leg and my foot slipped off the foot peg," he maintained.
"If you look at the image from the helicopter it's clear that when my foot slipped of the foot peg, Marquez had already crashed. I didn't want to kick him, especially because, if you give a kick to a MotoGP bike, it won't crash, it's very heavy."
Marquez was adamant that Rossi had deliberately pushed him out. "For me it's easy to explain what happened because in the TV you can see clearly, you can see in the video," he told reporters.
"On that corner, corner 14, Valentino passed me, I held the bike, then I pick up, but then I saw that he was completely straight and looking at me and stopping a lot," he continued. "And then I saw that with his leg he push my arm and my front brake, and then I locked the front wheel and I crash."
The double world champion admitted he had never experienced anything like the incident before. "During my career I have many, you know, I mean, many battles and everything, but never I feel this -- that another rider push me out with the leg," he said.
"I think the battle cannot go more far, to arrive in the point where a rider hits another with the leg and makes him crash we cannot arrive more far."
Marquez added that he wanted to put the incident behind him. "I want to try to forget about all this, and the important thing is that I'm fine physically. I hope, for the sake of the sport that this ends here."
But Rossi continued to imply that the Spaniard was deliberately trying to prevent him win the title. "For me the sanction is not fair, because Marquez won his fight. His program is OK because he is making me lose the championship," he said.
"I just want to fight for the championship with Jorge and let the better man win, but like this that's not happening. Like I said, I didn't want to make Marquez crash, but I had to do something because at that moment Jorge was already gone. The championship is not over yet, but this sanction cut me off by the legs and made Marquez win."
Lorenzo was satisfied with his second place. "It was a very hard race. I gave the maximum to keep Dani's rear wheel as close as possible, but to be honest his pace had been unbelievable. He was so quick and consistent and picked up the bike in a perfect way, so it was very difficult to overtake him on braking. I could only finish in second place, which is important because we recovered points."
He admitted he was surprised at the incident with his teammate. "When I saw the battle between Marc and Valentino I was really surprised because the action was huge and I have to respect race direction's decision."
A tempestuous MotoGP season now moves to its enthralling conclusion in a fortnight in Valencia. Rossi will need a miraculous ride, or a big mistake from Lorenzo -- possibly both -- to take the title. Don't bet against him though.