Erling Haaland equalled a Manchester City record as the champions inflicted Arsenal's first home defeat of the season and leapfrogged their title rivals into top spot.
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The Norwegian scored his 26th Premier League goal of the season, the joint-most by a Man City player in a single campaign in the competition, matching Sergio Aguero's tally from 2014/15.
Arsenal were dealt an injury blow before kick-off with midfield lynchpin Thomas Partey ruled out, while conversely City had good news with Haaland fit to start after an injury scare.
Arsenal's January signing Jorginho stepped in to fill Partey's anchor role in midfield, making his first Premier League start for the Gunners, while Takehiro Tomiyasu replaced Ben White at right-back.
Gunners boss Mikel Arteta might have rued that change in his defence when Tomiyasu gifted City the opening goal in the 24th minute, under-hitting a backpass and allowing Kevin De Bruyne to lob an exquisite finish over Aaron Ramsdale.
Arsenal's young heads could have dropped but they hit back shortly before half-time. City goalkeeper Ederson fouled Eddie Nketiah, and Bukayo Saka converted the penalty, maintaining his 100 per cent record from the spot with four goals from four attempts.
At 21 years and 163 days, Saka also became the youngest player to score 25 league goals for the Gunners, breaking the record held by Cesc Fabregas, at 22 years 237 days.
However, Pep Guardiola's side regained their lead in the 72nd minute when Haaland and Ilkay Gundogan combined to set up Jack Grealish.
Haaland then wrapped up the victory 10 minutes later, slamming the ball home following fine work by De Bruyne, who provided his sixth Premier League assist for his team-mate this season.
City are level with Arsenal on 51 points but move into pole position on goal difference, albeit having played one match more.
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The title rivals are both back in action on Saturday, with Arsenal looking for an immediate response when they travel to Aston Villa in the early kick-off.
The Gunners have now dropped eight points from their last three matches.
But a first win in four outings, against their former manager Unai Emery, would take them back to the top of the table before Man City visit Nottingham Forest, with the champions targeting a fifth win in six matches.
Also in this series
Part 2: Arsenal v Man City: Second-half tweaks proved decisive
Part 3: Guardiola: Arsenal are still top of the league
Part 4: What's next in the title race after Man City beat Arsenal?