In a contest that caught fire in the second half, City found the back of the net, only for Phil Foden's effort to be overturned after a VAR review identified a foul by Erling Haaland on Fabinho in the build-up.
Liverpool, who are the first team in 19 Premier League fixtures to stop City from scoring and the first to prevent Haaland have any goal involvement in a match, rise to eighth on 13 points.
The champions remain second on 23 points, four behind Arsenal.
Arsenal claim dramatic win
The winger put Arsenal ahead after the players had been brought off the pitch for 36 minutes due to a power failure that affected communications with VAR at Elland Road.
Leeds had several opportunities to equalise, with Patrick Bamford's second-half missed penalty the best.
The drama continued in stoppage time as Gabriel was shown a red card for a clash with Bamford that gave Leeds another penalty. But a VAR review led to both decisions being overturned to allow Arsenal to hang on for the three points. Leeds drop to 15th with nine points.
Mount at the double
Mason Mount was the hero, scoring twice, his second an exquisite free-kick from distance.
The result keeps Chelsea in fourth on 19 points, while Steven Gerrard's side lie 16th with nine.
Stalemate at Old Trafford
Neither Manchester United or Newcastle United could get the upper hand as the match ended goalless at Old Trafford, leaving Erik ten Hag's side in fifth on 16 points, with Newcastle a place and a point further back.
Southampton end losing run
Saints remain in the relegation zone in 18th, with eight points, as West Ham move up to 12th on 11 points.
The wait for more Premier League action is not long as four teams play on Tuesday night.