Trent Alexander-Arnold's expertly taken finish earned Liverpool a hard-fought point in a tight battle of the Premier League's top two at the Etihad.
Erling Haaland's 50th top-flight goal looked like it would be enough to earn the champions a record-equalling 24th consecutive home win.
But Pep Guardiola's side were made to pay for their passivity in the second half when the England defender popped up on the edge of the area and stroked his shot into the far corner beyond Ederson.
The hosts had the better goalmouth chances, with Jeremy Doku proving a constant threat down the left.