The match was overshadowed by anticipation of the pre-kickoff ceremonials after City left-back Wayne Bridge refused to shake the hand of former team mate and Chelsea captain John Terry because of Terry's alleged affair with Bridge's former girlfriend.
The crowd revelled in the histrionics, their jeers reaching a crescendo at the traditional lineup when Terry faced Bridge, his hand proffered and rejected.
The jeers followed the City defender whenever he had the ball but it was his supporters who had the last laugh as Chelsea's unbeaten run at home, stretching back to November 2008, ended.
Chelsea's defence marshalled by Terry looked jittery after Frank Lampard's 40th minute strike. A howler of a back header by John Obi Mikel gifted Carlos Tevez a goal just before half time.
"We lost our balance," a clearly rattled coach Carlo Ancelotti said. "It's the first time we have lost our balance like that."
City sensed Premier League leaders Chelsea's defensive frailty and scored three times on the break, the speed of Craig Bellamy proving the difference down the left wing.
"We made a mistake. In football when you make a mistake you lose," Ancelotti said.
The Chelsea manager, whose side lost to former coach Jose Mourinho's Inter 2-1 in midweek in their last 16 Champions League first leg, refused to blame off-field distractions for the defeat.
"Manchester City were not distracted and we were not distracted," he said.
Terry was stripped of the England captaincy after the scandal gripped the nation, but enjoyed the chants of the Stamford Bridge faithful "there's only one England captain."
Ancelotti's compatriot Roberto Mancini, renewing a Milan rivalry with his opposite number, also refused to be drawn into the scandal. "I am pleased for Bridge's performance and that his team won," the City coach said.
"We were very motivated as it could change our season," he said. City are vying with Liverpool, Tottenham and Aston Villa for the coveted fourth place and a berth in the Champions League to justify high spending by their new Abu Dhabi owners.
Ancelotti, whose first eight months in charge have earned him the support of the Stamford Bridge faithful, may now be criticised for his substitutions, removing a lively forward in Joe Cole after City's second goal and inserting Daniel Sturridge who looked out of his depth.
