Radamel Falcao announced his return to goalscoring action as Monaco's 1-0 win prevented Arsenal from winning the Emirates Cup.
Hopes were high that the Gunners would lift the trophy for the first time in four years, but Arsene Wenger's side were caught napping when Falcao ghosted into the box and nodded home from a free-kick eight minutes before the interval.
The hosts struggled to find a way through last year's Ligue 1 runners-up but will feel aggrieved that they were not awarded a penalty when Monaco keeper Danijel Subasic brought down Chuba Akpom late on.
Referee Martin Atkinson gave a free-kick, although replays suggested it was clearly inside the area, and the hosts were thwarted in their hunt for the equalising goal they needed to win the tournament.
Instead, it was Valencia who took the trophy after earlier beating Benfica 3-1.
