The unfancied north Londoners made a dream start, snatching the lead with just six minutes on the clock. After Marquinhos' attempted clearance cannoned off Leandro Trossard near the halfway line, Havertz suddenly found himself running in on goal and he crashed an unstoppable finish into the roof of the net.
That goal gave the Arsenal licence to do what they do best: sit back and defend. Gabriel, in particular, was outstanding, making multiple crucial interventions in the remainder of the first period, including a perfectly-timed challenge on Khvicha Kvaratskhelia in the box as he was primed to shoot.
The Gunners still looked threatening on their rare forays forward, though, with PSG goalkeeper Matvey Safonov doing well to cut out Bukayo Saka's dangerous low cross and Havertz denied by Marquinhos' block in first-half stoppage time at the end of a fine passing move.
However, their hard work was undone shortly after the hour mark when Cristhian Mosquera was caught out by a quick one-two and completely wiped Kvaratskhelia out in the penalty area with a mistimed lunge. Dembele stepped up to convert the resulting spot-kick and level proceedings amid a shift in momentum.
Arsenal had to weather a flurry of late chances to take the final to extra-time. First, Myles Lewis-Skelly deflected Kvaratskhelia's effort onto the post, before David Raya crucially cut out Bradley Barcola's searing run and Vitinha whipped a fierce shot onto the roof of the net with a minute remaining.
A cagey additional period was punctuated by one flashpoint as substitute Noni Madueke went down under pressure from Nuno Mendes, but the referee waved away Arsenal's penalty appeals and his decision was confirmed by VAR. There were no clear-cut chances, and penalties were confirmed when Viktor Gyokeres' strike deflected wide in the last minute of additional time.
In the shootout, Eberechi Eze pulled his spot-kick wide before Raya bailed him out with a fine save from Mendes. It would go to sudden death, and after PSG converted their fifth penalty, Gabriel stepped up and sent his soaring into the Budapest night sky to hand the holders victory.
GOAL rates Arsenal's players from the Puskas Arena...
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