Gael Clichy was sent off just before the hour mark with after a second bookable offence and substitute Frank Lampard scored a winning penalty as the visitors lose unbeaten record.
Lampard's winner came after Chelsea's Raul Meireles cancelled out Mario Balotelli’s second-minute opener in a fiery and wet encounter at Stamford Bridge
The visitors were looking to extend their lead at the top of the table by trying to beat a side still in contention for the league title but two yellow cards in 12 second-half minutes for Gael Clichy made it hard for Roberto Mancini’s men as Chelsea piled on the pressure.
Inside the first two minutes Manchester City opened the scoring after a fine through ball from Argentine striker Sergio Aguero found Balotelli. The Italian quickly got the ball from out of his feet before knocking it around the onrushing Petr Cech and calmly slotted into an empty net.
It was the Italian’s eighth Premier League goal this season from 10 appearances and his fifth in five starts.
Moments later, Portuguese midfielder Raul Meireles let fly from 25 yards out as the home side looked for a quick reply but his effort sailed wide of Joe Hart’s goal.
Meireles again tried his luck to get his side level but his shot was deflected over the bar. From the resulting corner, the Blues failed to test Hart and instead the ball went down the other end and Aguero should have put his side two-goals in front.
He held off Jose Bosingwa before dancing his way past Ashley Cole and Romeu after a ball over the top from Balotelli, who was looking to return the favor. But his left foot shot went the wrong side of the post.
David Silva went down in the box after 14 minutes after Bosingwa stuck a leg out but referee Mark Clattenburg waved away any protests, leaving manager Roberto Mancini frustrated on the sidelines.
Didier Drogba brought Hart into action as he shifted the ball from one foot to the other before making the England international tip the ball around the post but he should have been ruled offside though.
Meireles finally got his reward for his determination to get his side the equalizer by doing exactly that on 34 minutes.
Captain John Terry’s delightful ball on his wrong foot found Daniel Sturridge. The striker took on Gael Clichy down the right-hand side, biding his time, before nicking the ball past him with a quick change of pace. He looked up and crossed the ball into the box, and to the delight of the home fans, Meireles was on the end of it with a clever side-foot volley from inside the six-yard box which left Hart with no chance.
The goalscorer could have gone from hero to villain moments later after he lost control of the ball and when trying to reclaim it went studs first into Pabloo Zabaleta, catching him on the shins. Referee Clattenburg decided it only warranted a yellow card when it so easily could have been red.
Sturridge had a chance to put the hosts in front for the first time in the match after a free kick from Mata dropped at his feet minutes into the second half. He got the ball out of his feet but his snapshot was always rising.
Clichy collected a second yellow after a clumsy challenge on Ramires just before the hour mark, leaving Mancini’s men with 10 men and Chelsea tried to make its advantage count and had numerous of chances through striker Sturridge before finally making a breakthrough with nine minutes remaining.
Joleon Lescott put his arms up in the air to block Sturridge’s curling effort and Clattenburg immediately pointed to the spot. Substitute Lampard, making his 350th Premier League appearance, made no mistake from the spot minutes after coming on for Meireles and thundered the penalty straight down the middle of Hart’s goal.
The home side looked the more likely to add a third instead of the visitors getting an equalizer and Chelsea held on down the stretch.