The result comes amid a tumultuous few days for the champions. Pep Guardiola's side failed in their attempts to sign Tottenham striker Harry Kane earlier in the week before seeing rivals Manchester United beat them to the signature of Cristiano Ronaldo, with City still in the market for a striker in the final days of the transfer window.
They may be frustrated in their bid to get more attacking inforcements but City had no problems on the pitch on Saturday, securing an 11th win in 12 matches over their feckless opponents. The North Londoners' early season struggles continued, though, as they lost a third match in row. Not since 1954-55 have the club suffered such a poor start to a league campaign, with pressure increasing on Mikel Arteta in charge. He wasn't helped by Granit Xhaka's sending off in the first half, and the afternoon quickly turned into a damage limitation exercise from there.
Ilkay Gundogan opened the scoring on six minutes before Ferran Torres quickly added another and Gabriel Jesus made it 3-0 just before half time. Rodri made it four on 52 minutes and Torres netted a fifth on 84 minutes to complete the rout.
There was some cheer for the home supporters prior to kickoff, with the club unveiling two statues for Manchester City legends Vincent Kompany and David Silva outside the Etihad. Fittingly, there were plenty of statutes in the visiting backline, despite Arteta's defensive team selection.
Arteta, who previously served as Guardiola's assistant at City, sprang a surprise as he made four changes, with Calum Chambers, Sead Kolasniac, Martin Odegaard and Pierre-Emerick Aubameyang coming in, and he used three centre-backs in a back five in a bid to stifle City's array of attacking talent.
But Arsenal soon fell behind. Jesus' cross found Gundogan at the back post and he nodded past Bernd Leno to put the home side in front. Gundogan almost made it 2-0 moments later, but Leno came out to deny him.
Arsenal were rattled, and soon further behind. Arteta's defence was a shambles and Torres made it two on 11 minutes, evading his marker and flicking the ball home with ease.
It soon got worse. Xhaka's mindless decision to jump into a tackle on Joao Cancelo two-footed gave referee Martin Atkinson no option but to send him off and after just 36 minutes, some away fans had seen enough and made their way to the exit.
Those who stayed were left reeling, with Jack Grealish wriggling down the left and finding Jesus, who smashed in from close range to finish the game as a contest.
Saturday marked 10 years to the day that Arsenal suffered an 8-2 hammering at Manchester United and Arteta, who signed for the club in the aftermath of that defeat, must have had that sinking feeling again soon after half time. Rodri side-footed a beautiful effort from outside the box into the bottom corner to deepen the gloom on City's opponents.
There was still time for more embarrassment for Arsenal, with Torres grabbing his second of the game on 84 minutes when he nodded past Leno to make it five.
At one stage recording 97% possession, it was a stroll in the sunshine for City, while Arsenal's hunt for their first point -- and goal -- of the season continued.
Afterwards, Guardiola hinted that City may not sign a striker before the transfer deadline and he also had words of encouragement for Arteta, his former assistant.
"Arteta knows how I love him," Guardiola told BT Sport. "In the two or three years he was here he was important to what we built. People want results right away, with the players he had today, Ben White, Thomas Partey were missing, many players they invested in were missing, without that it is difficult.
"I know his awareness as a manager and as a leader, the moment everyone is back he will do an excellent job. I know this because I know him, I know the job he can do."