Santi Cazorla and Olivier Giroud were on target as Arsenal won 2-0 at the Etihad Stadium to strike a blow to Manchester City's Premier League title hopes.
Much had been made of Arsenal's inability to beat the big clubs in the top flight ahead of Sunday's encounter, but Arsene Wenger's side proved they are no soft touch with an impressive display to consign City to a first defeat in 15 games.
Cazorla opened the scoring from the penalty spot in the first half after returning City captain Vincent Kompany was adjudged to have blocked off Nacho Monreal.
City, who also welcomed leading scorer Sergio Aguero back into the starting line-up, were devoid of ideas going forward in the first half but were far more threatening after the break.
The defending champions were unable to pull off a fightback, though, and there was no way back when Cazorla turned provider with a free-kick that was headed home by Giroud.
Defeat for City was their second at home in the league this season and a first loss since back in November ensured Manuel Pellegrini's side remain five points behind leaders Chelsea, with the two teams set to face each other next in the Premier League.
Arsenal have now won five of their last six games and leafrog arch-rivals Tottenham into fifth place.
Aguero made his first start for six weeks and Kompany was also back in the City starting line-up along with James Milner.
There were two changes to the Arsenal starting line-up following victory over Stoke City last weekend, with Aaron Ramsey and Hector Bellerin in for Tomas Rosicky and Mathieu Debuchy.
City made a positive start and Aguero was unable to pick out a team-mate from the byline after referee Mike Dean played an excellent advantage when Laurent Koscielny clattered into Fernandinho with a clumsy challenge that resulted in a yellow card for the Frenchman.
It was Arsenal who were in front after 24 minutes, though, when Kompany tangled with Monreal after the full-back played a neat one-two with Giroud and, although Joe Hart guessed the right way, he was unable to keep out Cazorla's precise penalty.
City looked short of ideas going forward as a frustrated David Silva was unable to make his presence felt and Aguero was starved of service.
Pellegrini reacted to City's lacklustre first-half display by replacing Milner with Stevan Jovetic at half-time and Aguero came close to an equaliser just after the break when his deflected strike was only just off target.
The hosts were posing far more of a threat to the Arsenal defence and Jesus Navas' drive was beaten away by David Ospina before Fernandinho's strike was deflected over.
The game was being played at a frantic pace and Koscielny then got a crucial touch on Navas' cross to divert the ball for a corner as Aguero was poised to turn it into the empty net.
City were left with a mountain to climb when an unmarked Giroud punished some poor defending by nodding in Cazorla's free-kick after 67 minutes to stun the home fans.
Mathieu Flamini ought to have provided another goal for Giroud late on, but Kompany got in the way of his attempted pass as Arsenal saw out the game with ease.
