Sergio Aguero ended up being the difference for the champions as he registered his 14th hat-trick for the club and helped them move to within two points of Jurgen Klopp's leaders.
City were the favourites heading into the contest but Arsenal responded well to conceding inside the first minute and captain Laurent Koscielny equalised for Unai Emery's men.
That said, they crucially couldn't get to half-time at 1-1, with Aguero tapping home just one minute before the interval, and the second period was a tough watch for Gunners fans.
Arsenal failed to record a single shot in the entire second-half, and there is one clip which shows just how easy they made it for Man City at times after Aguero's third goal.
How Arsenal set up at the Etihad
Emery deployed a 4-4-2 system against Pep Guardiola's side, with a midfield quartet of Alex Iwobi, Lucas Torreira, Matteo Guendouzi and wing-back Sead Kolasinac.
However, five minutes after Aguero completed his hat-trick, Iwobi and Kolasinac were taken off for new loan signing Denis Suarez and Aaron Ramsey, whose contract expires this summer.
Arsenal putting no pressure on Silva, Walker and Otamendi
In the 69th-minute, with the score at 3-1, City won back possession and David Silva led a counter-attack, but he put the breaks on after not finding a good enough option in front of him.
The silky Spaniard then preceded to stroll back to the central area of the pitch, completely uncontested, and pass the ball to Kyle Walker.
As shown in the video below, the England international and Nicolas Otamendi exchanged six passes under no pressure at all before finally being closed down by Alexandre Lacazette.
Arsenal, who once again left Mesut Ozil as an unused substitute, faded away during the 3-1 defeat and the above moment perfectly captures that.
To make things worse, Manchester United's 1-0 win at Leicester City moved them down to sixth in the table and they're facing a fight to avoid another year without Champions League football.
What do YOU make of Arsenal putting City under no pressure in the 69th-minute? Can they finish in the top four? Can City catch Liverpool? Leave YOUR thoughts in the comments box below!News Now - Sport News