Wayne Rooney scored his 200th Premier League goal moments after David Silva hit the post at the other end to hand the lead to Everton after a lively opening half hour at the Etihad.
Dominic Calvert Lewin played a simple square ball to the former Man United man and he finished clinically in the 35th minute.
Man City's Kyle Walker was then sent off just before the break for a second yellow card, leaving the hosts to fight back a man down.
Raheem Sterling came off the bench to equalise late before Morgan Schneiderlin was sent off, leaving both sides to finish with 10 men.
Follow the reaction and see how the drama unfolded below.
Plus, you can see the table as it stands and all the results from the weekend HERE .
Talking point 1: Persecuted Pep
Frustration and anger undermined Pep Guardiola’s title challenge last season, forever moaning about decisions and putting forward a persecution complex.
Kyle Walker’s sending off will not have changed his mind this season. The first yellow card for a foul on Leighton Baines was the right call.
The second, a shove on Dominic Calvert-Lewin, was incredibly harsh. Referee Robert Madley gave the first after 42 minutes, the second after 44 minutes and it was hardly as if he could have forgotten he had already booked Walker.
His reaction after the match, refusing to be drawn on the subject, said it all.
Talking point 2: Everton can push for glory
Ronald Koeman has enjoyed a whirlwind summer of new signings, spending big to reshape the squad and rebuild Everton.
Jordan Pickford, Michael Keane, Wayne Rooney, Gylfi Sigurdsson and the rest are proof of Everron’s ambition.
Beating Stoke at home is one thing, winning at Manchester City would have been quite another. This draw was still one hell of a statement of intent.
With their proud promotion of their young players and reliance on the experience of Phil Jagielka and Leighton Baines, this Everton squad looks well balanced.
Another push for a European place must be the aim but if they can keep frustrating the big boys then they might be thinking even higher.
Talking point 3: Two-footed Pickford
Amid all the talk about sweeper keepers and keepers needing to play with their feet, here is a keeper who can play with both feet.
Jordan Pickford played out from the back looking equally comfortable on both his right and left foot. He can hit long with his left, accurate chips with his right and looks very composed in the Everton goal.
Gareth Southgate picks his England squad on Thursday and surely Pickford will be in, Jack Butland is making a string case to be No1 and Joe Hart will be seriously concerned about his status as No1.
Talking point No.4 - Welcome to the Tunnel Club
City have launched a new Tunnel Club, taking corporate hospitality to a whole new level.
The catch is that there is see-through glass in the tunnel where punters can stand, watch the players walk through and warm up. They can even watch post-match TV interviews from their privileged position.
The plush cushioned seats are behind the tunnel and benches. You have to pay for the experience, of course. But it is, without doubt, the way forward for well heeled fans.
In fact, Tottenham are planning something similar in their ground…
Talking point No.5 - Up in smoke
What is it with clubs that set off fireworks or flames before kick-off? It may look spectacular, but the smoke lingered for so long at the Etihad that you could barely see the first ten minutes.
Not only did it cloud the TV pictures but, for those of us in the stands, it was also a very foggy experience.
Thankfully, it just about cleared up for half time - in time for City fans to see their team go behind.
At least they had something to celebrate in the end.
Wayne Rooney shows he can still take on explosive top flight battles at full tilt
You can take Wayne Rooney out of Everton, but you can’t take Everton out of Rooney, writes John Cross at the Etihad.
His celebration said everything about Rooney’s passion for his first love, his first club and his return as an Everton hero.
Never mind it was his landmark 200th Premier League goal - he is now only second behind Alan Shearer in the goalscoring charts - this was all about Rooney’s renaissance.
It was a brilliant, breathtaking game and it showed that Rooney can still play at full tilt in the most explosive of Premier League battles.
Even in the dying minutes, Rooney was chasing down lost causes as Everton put up a brave and valiant fight for a point.
"What again!?" Rooney cracks joke about what it's like to score against Man CitY
Wayne Rooney couldn’t help but crack a joke about scoring against Manchester City after bagging the opener for Everton in their 1-1 draw.
The Red Devils legend hit the back of the net in the first half of the Premier League clash, as the Citizens struggled against their organised visitors.
Rooney celebrated his goal by sprinting away in delight and heading towards the City supporters packed inside the Etihad.
The 31-year-old then cupped his ears - angering more than a few of them - before celebrating with his other teammates.
Speaking about his goal after the game on Sky Sports, Rooney was asked to explain what it’s like scoring against Man City, and he couldn’t help but crack a joke.
“What again!?” asked Rooney, replying to Gary Neville while laughing. “Of course it was nice obviously, with me at Manchester United scoring a few times here.
“To do it today in such an important game for us, early on in the season we’ve got tough games coming up, it was a sweet moment and I’m sure the red half of Manchester would have enjoyed that on.”
EVERTON player ratings
Pickford 7
No better distributor of possession in his position. Top keeper
Keane 8 MOTM
Brings a cool head to affairs and looks a great addition
Williams 7
No messing about, just good, solid, no-nonsense defending
Jagielka 7
Amazingly, looks to have regained a yard or two of pace
Holgate 6
Had his hands full but generally coped pretty well
Schneiderlin 6
Sent off. Had to tread carefully after cynical early foul on Aguero - and didn’t last the game
Gueye 7
Tireless tackling performance, so often breaking up play
Baines 7
Several brilliantly-timed challenges, used all his experience
Davies 6
Booked. Cautioned early for diving but didn’t curb his tenacity
Calvert-Lewin 6
Played his part in Rooney’d goal and Walker’s dismissal
Rooney 7
Laboured early on but his game intelligence shone for his goal
SUBS
Klaasen (Williams 61 mins) 6
Sigurdsson (Davies 61 mins) 6
Besic (Rooney 90 mins)
Manchester City player ratings
Ederson 5
Go into a serious tangle for the Rooney goal. Unconvincing
Kompany 5
Was a little static at times, not at the top of his game
Stones 6
Not overly-taxed but ttill yet to truly convince in a City shirt
Otamendi 6
Brought most to the party when he tried twice from range
Walker 5
Sent off. Second yellow was a little harsh but lost his discipline
Fernandinho 7
Usual combative self and did a lot of unselfish graft
Sane 5
Very little came off and at fault in build-up to Rooney’s goal
De Bruyne 6
Looked one of the likelier characters to cause Everton trouble
Silva 7
Always the most creative and unlucky with a strike against the post
Aguero 6
Effervescent but unusually hesitant with a couple of opportunities
Jesus 5
One of the poorest performances of his brief City career
SUBS
Sterling (Jesus 46 mins) 7
Danilo (Stones 65 mins) 6
B Silva (Sane 69 mins) 7
Schneiderlin sent off - both teams to finish with 10
Equaliser from super-sub Sterling!
Sigurdsson makes Everton debut
Everton punching above their weight?
Some approval from boxing star and famed Toffees fan Tony Bellew here for Rooney.
Walker gets his marching orders
Rooney remembers where the City fan are? And he's all ears
And the Manchester United fans loved it too.
Immediately after hitting the back of the net - his 200th Premier League goal - Rooney wheeled away in delight and went to celebrate with his Everton teammates.
But many Manchester United fans spotted him gesturing to the Citizens supporters - holding his hands to his ears - moments after the ball crossed the line.
Man City 0-1 Everton: Rooney scores 200th Premier League goal!
David Silva with his aerodynamic new look fends off Everton’s Idrissa Gueye
Fergie in the house
Another enemy spy (?) in the stands in the blue half of Manchester, former United boss Sir Alex Ferguson.
We can see you, Jose!
Manchester United boss Jose Mourinho may be wearing a hat - worried about the eclipse, perhaps? - but he stands out from the crowd at the Etihad.
His side are two wins in two at 4-0 a go - decent start to the season.
Etihad under fog?
Nope, just fireworks directly before kick-off which has seen the opening minutes be a bit of a blur for most.
The Tunnel Club get what they’ve paid a mint for as the players head onto the pitch.
Fans are filing into the Etihad as the sun goes down in Manchester.
Gylfi ready for debut
Gylfi Sigurdsson is warming up but he’ll have to wait for his debut - Everton’s record signing is on the bench.
Handy asset to bring on later for Ronald Koeman.
Rooney close to 'home'
A strange sort of night for Wayne Rooney, lining up against his former club’s arch rival for his new club.
No lack of motivation though to keep up what has been some fairly impressive form early doors on his return to the Toffees.
How City line up - Danilo benched for Sane
City have corrected their starting line-up moments after announcing it with Leroy Sane getting the nod ahead of Danilo, who goes to the bench.
How Everton line up
Man City unchanged for tonight
City's fancy new walkout!
Man City and Everton players will have a feeling that someone’s watching them tonight when they take the pitch.
That’s because they will be - and not just on tele (Sky Sports coverage from 7pm - with kick-off at 8pm).
The new tunnel features mirrored, double-sided glass that allows the VIP fans to get closer than ever to the players, as shown in this brilliant video.