Danny Welbeck returned from injury to score a dramatic late winner as Arsenal closed the gap to Premier League leaders Leicester to two points.
The Foxes looked set to hold out for a vital draw as a thrilling game went into injury time, despite being reduced to 10 men after Danny Simpson was sent off for a second yellow card early in the second half.
This was until Welbeck, playing his first competitive game since April last year, glanced Mesut Ozil's free-kick past the magnificent Kasper Schmeichel to spark wild celebrations at Emirates Stadium as Leicester lost in the league for just the third time this season.
Jamie Vardy gave the Foxes the lead with a hotly-disputed penalty on the stroke of half-time after he tumbled over Nacho Monreal's outstretched leg.
Substitute Theo Walcott then set up a frantic final 20 minutes with a side-foot finish from Olivier Giroud's superb knockdown.
Leicester still lead the table - but Arsenal's win leaves them only two points clear.
In those closing seconds, with the Emirates awash with tension and anxiety, it looked like Leicester would secure a point that would feel like a victory to manager Claudio Ranieri and his players.
It would have been a draw achieved with a numerical disadvantage at the home of a title rival - and would have given them four precious points from visits to Manchester City and Arsenal.
Instead, Welbeck's intervention left Ranieri and his men desolate after an outstanding backs-to-the-wall performance, exemplified by the brilliance of keeper Schmeichel as he kept Arsenal at bay, with one late save from Giroud world-class especially notable.
Now they must bounce back at home to Norwich City in their next game - but why should we question them after what they have shown us this season?
As for Arsenal, this result will revive their title hopes as the impact will be just as dramatic for them. It would have felt like a defeat had they not beaten a Leicester side reduced to 10 men for 36 minutes.
So the title landscape has changed - but it is still Leicester at the top of the table.Now they must bounce back at home to Norwich City in their next game - but why should we question them after what they have shown us this season?
As for Arsenal, this result will revive their title hopes as the impact will be just as dramatic for them. It would have felt like a defeat had they not beaten a Leicester side reduced to 10 men for 36 minutes.
So the title landscape has changed - but it is still Leicester at the top of the table.
As Arsenal manager Arsene Wenger rightly said after the match, his team were looking down the barrel when they trailed at half-time.
At that point, they were eight points adrift of the Foxes with only 12 games left after this one - a daunting gap.
Walcott's equaliser and that injury-time winner from Welbeck, who has been out for almost a year with a knee injury, was reward for their persistence and effort in the second half.
It was not just vital in the context of this game, it was crucial in the wider context after a poor run of home form which had seen the Gunners fail to win in four league games - with three draws and a defeat - before last week's win at Bournemouth.
N'Golo Kante arrived at Leicester City in early August as an under-the-radar £6m signing from French side Caen - he should now be a contender for Player of the Year.
In the first 45 minutes in particular, the Paris-born 24-year-old gave a masterclass in the arts Ferdinand was talking about. While the likes of Vardy and Riyad Mahrez have rightly claimed the limelight, Kante has been just as influential in the manner in which he retains and regains possession, helping Leicester to set up those trademark counter-attacks.
Referee Martin Atkinson was left to handle a tidal wave of pressure and emotion, especially after awarding Leicester that penalty.
It was a tough call, with Vardy clearly accepting the invitation literally extended by Monreal's outstretched leg.
Vardy bought the penalty but it was understandable to see why he gave it - and it is worth noting former Arsenal legends Lee Dixon and David Seaman tweeted their agreement with the decision.
Arsenal fans were demanding every decision after that - and most supporters around the country would be the same - but Atkinson's decision to send Simpson off for two soft fouls was also correct.
It is not just players under stress on these occasions.
Arsenal boss Arsene Wenger, speaking to BBC Sport: "The effort, energy, intensity was all good. Leicester defended very well but we had bad luck to be 1-0 down at half-time. We were relentless after that - we should have scored more goals.
"It was a pivotal moment today because the mathematics meant it could be eight points or it could be two points. That is a great change.
"There's a long way to go, we play a lot of big teams. But we had a bad spell where we couldn't win for four games and have now won two on the bounce. We have come out of that bad spell and still have a good chance."
Leicester boss Claudio Ranieri, speaking to Sky Sports: "It was a fantastic match, very fast. I don't know if in a normal match that our two yellows cards was a sending off. They were normal fouls, but not yellow cards. I think the referee was too severe to us for the sending off. 11 v 11, I'm sure we win the match. The match was full of fouls so why send off a player? Come on.
"We know Arsenal are a fantastic team, they move the ball quickly and have skill, but we had to concentrate. We tried to counter-attack and we controlled the match very well.
"We are still top of the table, got two points more - we must carry on and smile. We lost to our opponents - we must say well done."
