Sane started for City at Emirates Stadium as he stepped up his recovery from a knee injury that has sidelined him for nearly seven months.
Meanwhile, Arsenal gave 45 minutes each to first-team quartet Rob Holding, Ainsley Maitland-Niles, Pablo Mari and Reiss Nelson.
Folarin Balogun put the Gunners ahead in the very first minute and, although Man City levelled through Matt Macey's own goal, the 18-year-old restored Arsenal's lead with his second strike after the hour-mark.
The hosts were still ahead after 78 minutes, but Taylor Harwood-Bellis levelled, and Jayden Braaf put City ahead in the 84th minute.
Adrian Bernabe wrapped up a dramatic victory with his second strike two minutes from the end of normal time.
City climb to eighth, four points behind sixth-placed Arsenal, who have now lost their last three matches.