Pep Guardiola's side were stunned inside the opening minute when referee Anthony Taylor pointed to the spot after Gabriel Jesus bundled over Bruno Fernandes in the penalty area and the United talisman fired home the spot kick to put the Red Devils on their way.
It was an afternoon to forget for the champions-elect, who will be struggling for positives as they lost their precious winning run against the one side they didn't want to relinquish it to.
It was a nightmare opening minute for the hosts and they never really recovered as their performance lacked fluidity and a quality final pass. At the back, City looked particularly vulnerable to the pacey United counter and could've been punished further if it wasn't for some wayward finishing.
Manager rating out of 10
6 -- You can't legislate for the start his side had and you can't put too much blame at the door of Guardiola as City appeared to run out of steam after a stunning run of form.
Player ratings (1-10; 10 = best. Players introduced after 70 minutes get no rating)
GK Ederson, 6 -- Got a good chunk of hand on Fernandes' early penalty and had to be alert shortly after to deny Shaw, but he could do nothing about the England international's accurate strike to put United two up.
DF Joao Cancelo, 5 -- He spent large periods of the game in the opposition half but the Portugal international struggled to pick up the ball in-behind the United backline. Defensively he was left flat-footed by Shaw's bombing run on the way to United's second. Replaced by Kyle Walker in the 65th minute.
DF John Stones, 6 -- It's easy to give players poor ratings after such a terrible start, but the City No. 5 was largely solid apart from when he was rolled by Anthony Martial on the way to a United counter in the second half.
DF Oleksandr Zinchenko, 6 -- Thumped a fierce strike midway through the first half that was too close to Dean Henderson to trouble him. It was a relatively quiet afternoon on the defensive front, with United winger Daniel James not offering much of a threat.
MF Rodri, 6 -- It was a decent performance from the holding midfielder, who helped rev his City side up in the pace-of-play department after a sluggish start. Clipped the top of the bar with a strike from the edge of the box in the 48th minute.
MF Ilkay Gundogan, 7 -- Looked to test Henderson in the United goal, but the German was unable to seriously stretch the visiting stopper. The in-form midfielder was arguably his side's best player on the ball thanks to some beautifully weighted passes to cut through the disciplined United lines.
MF Kevin De Bruyne, 5 -- Unusually sloppy on the ball and was unable to inspire his side with a moment of magic. A hugely disappointing afternoon by the Belgian's astronomic standards, with the closest he came to a goal being a free kick that was comfortably tipped over the bar.
MF Riyad Mahrez, 6 -- It was a fascinating match-up between the winger and United left-back Shaw and the Algerian managed to wriggle away from the defender on occasion and cause some fleeting moments of danger, including a right-footed effort that whistled just wide in the closing minutes of the first half.
MF Raheem Sterling, 5 -- The forward's wait for a goal against United goes on and the 26-year-old largely struggled for space to operate against Aaron Wan-Bissaka. He should've scored in the 80th minute, though, but failed to connect to a Walker cross from five yards out.
FW Gabriel Jesus, 5 -- The Brazilian's needless, clumsy challenge gave United a penalty inside the opening 60 seconds and that mistake ultimately cost his side dearly. He burrowed away tirelessly to try to make amends, but it wasn't his day. Brought off for the final 20 minutes and replaced by Phil Foden.
DF Kyle Walker, 6 -- Provided a brilliant cross that put the ball on a plate for Sterling to get his side back into the game, but his England colleague let him down with a poor attempted finish.
MF Phil Foden, 6 -- Picked up some great pockets of space inside the penalty area, but couldn't quite find the finishing touch to make the last few minutes interesting.