Gennaro Gattuso said he was "worried and scared" as Napoli fell 2-0 at home to Fiorentina on Saturday leaving last season's Serie A runners-up scrambling to save their season.
A third consecutive defeat saw the southern giants slump to 13th position as they sit closer to the relegation zone than the Champions League places.
Napoli are without a league win at their San Paolo Stadium since October 19 ahead of hosting Barcelona in the Champions League in a month's time.
For Gattuso the "soulless, unwatchable and embarrassing" defeat was his fourth in five league games since replacing Carlo Ancelotti on December 11, with the club then in seventh spot.
"I'm very worried," admitted the 42-year-old former AC Milan coach.
"We have hit rock bottom and we need to understand what we are going towards.
"We're not looking at the Champions League, we're looking at the scary ranking. We're playing with fire."
Federico Chiesa and Dusan Vlahovic scored in either half to give Fiorentina a valuable win in Naples.
"The performance was embarrassing, we must apologise to the fans and the city," continued Gattuso.
"We only did a little bit in the first 20-25 minutes, then we were unwatchable. We tickled the opponents, without competitive fury."
Gattuso said the team had agreed to head straight to a training retreat at Castel Volturno, northwest of Naples, before hosting Lazio in the Italian Cup quarter-finals on Tuesday and welcoming champions Juventus to Naples next weekend.
"We have to look at each other, be together, let off steam and look for solutions. What we are doing is not enough," explained Gattuso.
"I was convinced that we would have a great performance today but I saw a team that did the opposite of what we had prepared."
- Lockdown fury -
Ancelotti was sacked despite a 4-0 win over Genk sealing Napoli's spot in the Champions League last 16 in December.
The veteran coach disagreed with club owner Aurelio De Laurentiis ordering the players into a week-long training camp after a 2-1 league defeat at rivals Roma on November 2.
The players broke the lockdown and returned home and were reported to have been fined a combined total of 2.5 million euros ($2.7 million) for their insubordination.
"It would be too easy for me to say that the problem is the fines, but this is a team that does give me so much in training," said Gattuso.
"When we get out there for a match, we don't do anything that we had prepared.
"It's not just a technical and tactical issue, but a mental one.
"I've played football with some really irritating people, but I always gave what I had on the pitch, even for those I didn't like."
In his playing days, Gattuso won two Serie A and two Champions League titles in 13 years at AC Milan.
He also won the World Cup with Italy in 2006.
He stepped down as coach of AC Milan last May after they missed out on the Champions League places on the final day of the season to city rivals Inter.
"I want to find a solution, I didn't come here to stay two months. I like difficult challenges," he warned.
Napoli have not won a trophy since the days of Argentina great Diego Maradona, who lifted them to their only Serie A titles in 1987 and 1990 and the UEFA Cup in 1989.
"Soulless, unwatchable and embarrassing": Napoli coach Gennaro Gattuso blasted his side's performance against Fiorentina