Manchester City’s top-four bid is no longer in their own hands as Alexis Sanchez’s equaliser spoiled Blues boss Manuel Pellegrini’s final home game.
Sergio Aguero fired City’s early opener into the bottom corner from 18 yards.
Arsenal striker Olivier Giroud headed in the equaliser within two minutes, but Kevin de Bruyne’s solo effort restored City’s lead after the break.
However, Sanchez tucked in Giroud’s lay-off to ruin Pellegrini’s farewell before Pep Guardiola takes over.
City substitute Wilfried Bony’s late volley thumped the crossbar, leaving the usually placid Pellegrini with his head in his hands.
Arsenal’s fightback means fourth-placed City could still miss out on the Champions League even if they beat Swansea in their final game.
Fifth-placed Manchester United, who have played a game less than their neighbours, will finish above City if they win both of their final two games.
Arsenal need a point at home to already relegated Aston Villa next weekend to clinch Champions League qualification for the 20th successive season.
Relive the dramatic draw at Etihad Stadium
Pellegrini’s imperfect goodbye
How will Manuel Pellegrini go down in Manchester City history? Domestic underachiever in some eyes, European pioneer in others.
City were well placed to win a second Premier League title in three seasons when the affable Chilean announced on 1 February that he would be replaced by Pep Guardiola at the end of the season.
Since then the Blues have won only six of their 14 league matches, meaning Guardiola could arrive from Bayern Munich without Champions League football to plan for.
Pellegrini has led City to League Cup victory this season and taken them into the Champions League semi-final. But the solemn expression of chairman Khaldoon Al Mubarak at the final whistle said everything – finishing fifth is not acceptable for the club’s mega-rich Abu Dhabi owners.
Arsenal close in on Champions League
Following second-placed Tottenham’s 2-1 home defeat by Southampton earlier on Sunday, Arsenal knew victory would move them level with their arch-rivals going into the final weekend.
Arsene Wenger’s side were unable to take all three points, but they showed character to fight back twice against top-four rivals City.
The Blues produced a lively attacking performance after being criticised for a laboured display in their narrow second-leg defeat at Real Madrid on Wednesday.
Pellegrini’s side deservedly led when Aguero found space to turn and drill in from the edge of the area.
A defensive mix-up between Joe Hart and Gael Clichy conceded the corner from which Giroud equalised, but De Bruyne’s run and precise finish edged City back in front.
The home side threatened a third before Arsenal fought back to earn a deserved point through Sanchez’s clinical strike from 15 yards.
Despite missing the chance to rein in Spurs, Wenger was satisfied with a point that puts them on the verge of Champions League football.
Only a shock loss against Villa, coupled with City and Manchester United taking maximum points in their remaining games, would see the Gunners finish fifth.
Mixed injury news for England (and Arsenal)
England manager Roy Hodgson was not present at the Etihad, having watched Spurs’ 2-1 defeat by Southampton at White Hart Lane instead.
Hodgson will have been concerned to see television pictures of Arsenal striker Danny Welbeck – a trusted member of his squad – limp off midway through the first half with a knee injury.
But, consequently, there was some positive news for Hodgson for Euro 2016.
Manchester-born Welbeck was replaced by midfielder Jack Wilshere, who made only his second substitute appearance of the season after his own 10-month injury absence.
Wilshere, 24, showed signs of his undoubted ability, topping Arsenal’s passing accuracy statistics, as well as – perhaps unwisely – launching into a couple of tigerish tackles.
“For me, 70 minutes – playing with high intensity and pressure – was great,” he said.
“I don’t want the season to end. I feel good and fresh so I will see what happens after that.”
Listen to the best bits of the match action via BBC Radio 5 live.
What they said
Manchester City manager Manuel Pellegrini:
“We should have won that game, and I think we deserved it. We played very well. Our first 25 minutes were some of the best here this season. But Arsenal’s goals were good.
“The effort, speed and character was good, and we were playing against a very good team.”
Arsenal manager Arsene Wenger:
“I am not disappointed because twice we were losing and twice we came back. It was a game that was very, very intense.
“I was surprised by the intensity of City’s start. We expected an intense game but they really came out with strong pressure.
“The good thing is that we absorbed it and we’ve shown good character today.”
The stats you need to know
- Sergio Aguero has scored in six consecutive Premier League games for the first time – the first Manchester City player to do so.
- Manchester City have not won any of their eight Premier League games against the top five this season, drawing three and losing five.
- Arsenal scored with their only two shots on target.
- Oliver Giroud scored his first goal in his past 16 Premier League appearances.
- Giroud now has 18 headed goals in the Premier League, more than any other player since the Frenchman made his debut (August 2012).