FRANK LAMPARD came off the bench to drill home the winner from the penalty spot as the Blues re-ignited the title race.
The goal eight minutes from time completed a great comeback for the Blues, who trailed after less than 90 seconds to a goal by Mario Balotelli, but hit back through Raul Meireles.
Undoubtedly it helped that City had Gael Clichy sent off with more than half an hour to go, but the Blues had the gumption to cash in and inflict a first defeat of the campaign on Roberto Mancini's men, who hardly threatened in a one-sided second half.
The win reduces the gap at the top to seven points and brings Stamford Bridge title hopes back to life. Man United will not have minded this result either.
It did not look like we were in for such a seismic result early on. With the game only in its second minute, Sergio Aguero dragged John Terry out of position on half way, turning smartly around the Blues skipper and threading a perfect through ball to Balotelli.
The Italian's pace and first touch took him easily past Bransilav Ivanovic and around Petr Cech before he rolled the ball home.
But Meireles made it 1-1 on 34 minutes with a volley from six yards thanks to the diligence of Daniel Sturridge, who managed to get past Clichy to the byline before playing in the ideal cross for the former Liverpool midfielder.
Chelsea had a scare on 15 minutes when Jose Bosingwa appeared to trip David Silva inside the area to halt a slick City move, but they deserved to be level at the break for their industry – even if they seldom worked Joe Hart in goal.
Sturridge in particular was a handful for the Premier League leaders and he almost put the Blues ahead soon after the break with a rasping drive from the edge of the area after latching on to Juan Mata's free-kick from deep.
The evening really began to look as if it might be Chelsea's though, when Clichy was sent off after picking up two yellow cards in the space of 11 minutes, the second for a foul on Ramires as the Brazilian raced onto a Didier Drogba pass to the edge of the area.
That gave the Blues 32 minutes to make an impression and their patient pressing eventually wore City down.
Mancini made it clear he would take a point at that stage, sacrificing Aguero for defender Kolo Toure, but his team could not hold out - Joleon Lescott conceding the penalty with a handball after raising an arm as Sturridge tried to chip past him.
A swirling wind arguably robbed the game of some of its finesse, although it did not prevent some eye-catching passages of play – and in any case, Andre Villas-Boas will not care one bit.
The sheer competitiveness prompted ref Mark Clattenburg to reach for his notebook seven times in all, with four Blues players also falling foul. But crucially, none of their players got sent off.
Line-up: Cech; Bosingwa, Ivanovic, Terry, Cole; Sturridge (Mikel 88), Ramires, Romeu, Meireles (Lampard 73), Mata (Malouda 84); Drogba. Subs not used: Turnbull, Torres Ferreira, Kalou. Attendance: 41,730