An early Karim Benzema strike was cancelled out by Sergio Aguero, but the draw was still enough for 10-man Real Madrid to qualify for the last 16.
With Los Blancos looking for the three points that would keep them in the hunt for top spot in Group D, Jose Mourinho made one unexpected change as Luka Modric started ahead of Mesut Ozil.
Whatever the starting XI, it was an exceptionally strong one, and it was the capital club who dominated possession in the opening exchanges.
The team in green were pushing high up the pitch and pressing constantly, and it paid off after just 10 minutes - A swift attack found its way to the feet of Angel Di Maria, whose pin-point cross found Benzema all alone at the back post, and the French striker coolly tapped home.
The Premier League club were offering nothing at either ends of the pitch, and the Bernabeu club really should have put the game to bed before the break.
Sami Khedira saw his header go wide and Luka Modric fired a shot over, but it was Cristiano Ronaldo who missed the most open chance – the Portuguese forward was slipped through one-on-one, but his chip over Joe Hart was cleared of the line by Matija Nastasic.
City did slowly start to get themselves back in the match. A switch to a back-four helped them sure up defensively, and they gradually began to make goalscoring opportunities as a result.
Aguero and Maicon saw their efforts ping high and wide respectively, but it wasn’t enough to break the deadlock.
Whatever Roberto Mancini said at half-time, it clearly had the desired effect as the home team came out playing with verve and intent.
David Silva was proving his mercurial, jinking-self and almost laid Aguero in on a plate, only for the Argentine forward to fluff his lines inside the area.
The former Atletico Madrid man had an even better chance though, midway through the second 45. A cross from Maicon found him at the far post, but where Benzema had scored earlier, Aguero could only hit Iker Casillas’ midriff.
With just over 15 minutes remaining however, he did equalise. Alvaro Arbeloa tripped the 24-year-old inside the area for a penalty – and whilst he was sent off for a second yellow, Aguero dusted himself off to score the spot-kick.
More pressure from the home team followed, but Madrid held out for the point and a place in the knockout stages.
Manchester City 1-1 Real Madrid
Scorers: Aguero pen 74 (MC)Benzema 10 (RM)
Manchester City: Hart; Kompany, Nastasic, Zabaleta; Maicon, Yaya Toure, Nasri (Tevez 61), Silva, Kolarov (Javi Garcia 45); Dzeko, Aguero (Milner 88)
Real Madrid: Casillas; Arbeloa, Ramos, Pepe, Coentrao; Khedira, Xabi Alonso; Di Maria (Albiol 90), Modric (Callejon 68), Ronaldo; Benzema (Varane 75)
Sent off: Arbeloa 73 (RM)