The fiery Italy international was involved in an unseemly post-match melee as Southampton slipped to a third consecutive defeat amid an injury crisis against Aston Villa on Wednesday, but he returned to St Mary's Stadium and grabbed the headlines for the right reasons.
A superb individual effort from the big-money close-season signing was the least Mauricio Pochettino's team deserved in a match they dominated for long periods after Sergio Aguero continued his purple patch in front of goal in the 10th minute.
Manuel Pellegrini's City won at West Brom on Wednesday, but this was a display far more in tune with the away-day woes that threaten to derail their Premier League title bid.
Midfielder Victor Wanyama suffered a hairline fracture to his leg and right-back Nathaniel Clyne damaged his pelvis in midweek, meaning Jack Cork and Calum Chambers came in as two of four changes in Pochettino's injury-ravaged side.
James Milner and Alvaro Negredo were recalled to the City XI and the latter was let down by a heavy touch after strike partner Aguero played him in on goal after six minutes.
Steven Davis scored in both matches against City last season and dragged an early shot wide before Aguero opened the scoring.
Samir Nasri teed-up Aleksandar Kolarov and the overlapping left-back's low cross was clinically dispatched first time by Aguero for a 17th goal in 15 matches.
Kolarov glanced wide from a Nasri corner three minutes later and Aguero blazed Pablo Zabaleta's 31st-minute cut-back over, but they were rare moments of encouragement for City.
Adam Lallana was involved in much of Southampton's best work but could not bring down Chambers' lofted pass in time to avoid Milner's last-ditch clearance.
The England man and James Ward-Prowse both failed to convert a Luke Shaw cross and another dangerous delivery from the same player was headed wide by fellow full-back Chambers in the 37th minute before Southampton levelled in magnificent fashion.
Osvaldo superbly brought down Davis' long pass and turned Vincent Kompany inside out to arch a shot into the top-far corner via the crossbar.
Nasri almost gave City a lead they scarcely deserved in first-half stoppage time, firing over after being picked out by Milner, but they resumed impressively as Paulo Gazzaniga got down well to thwart Aguero and Yaya Toure barrelled through a congested midfield to smash narrowly wide.
Osvaldo passed up a far simpler opportunity than the one he scored from in the 53rd minute, lifting a loose ball over after Costel Pantilimon dashed out to stop the rampaging Jay Rodriguez.
That combination continued to trouble City and Osvaldo pulled wide in the 57th minute on the back of Rodriguez causing further havoc.
Pellegrini moved to reinforce his over-run midfield as holding player Javi Garcia was introduced alongside Jesus Navas in place of Negredo and Milner with 62 minutes played, and Aguero raced outside Jose Fonte to shoot past the far post five minutes later.
But City's Argentinean talisman was restricted to half chances thereafter and they could be eight points behind Arsenal when the leaders arrive at the Etihad Stadium next Saturday.
