City were replaced by neighbours Manchester United earlier in the day but managed to get first position back with their eighth home win of the campaign and first clean sheet in nine outings.
In a very entertaining affair, City took the lead early in the second half when Wojciech Szczesny saved an angled shot from Mario Balotelli with Sergio Aguero trying to knock in the rebound. As Thomas Vermaelen won a headed battle with Aguero, the ball fell for David Silva who tucked it away under pressure for his fifth of the campaign.
There were chances galore for both sides throughout with City having the better of the opportunities, namely when Aguero lashed over the crossbar from close range in the 10th minute.
Arsenal looked menacing whenever they could get forward and went close twice early when Joe Hart was forced to make saves, first from Gervinho on an angle inside the area, and then from Aaron Ramsey who tested the England number one from outside from the ensuing corner.
Szczesny spread himself brilliantly when Mario Balotelli brought a high-ball to ground before turning and getting his shot off but the Pole was there to deny the in-form Italian.
The 35th minute saw Robin van Persie's deflected shot fall into the path of Ramsey who looked in on goal until Kolo Toure intervened with a well-timed albeit clumsy challenge which was good enough to deny the Gunners before Aguero forced Szczesny into a crucial save late in the first half.
Hart made a vital stop when Theo Walcott unleashed from the edge of the area a few minutes after the goal before van Persie had the ball in the back of the net but was adjudged to be off-side.
Just after the hour-mark, Aguero hit a scorching shot just wide of the mark as the game opened up even further moments before van Persie forced Hart into a save from Gervinho's cut-back as both teams stood toe-to-toe.
In the 66th minute, Zabaleta was unlucky when he thundered his shot from range into the upright about 15 minutes before Szczesny kept out another Aguero attempt.
Down the other end, Vermaelen hammered a late shot which was parried away by Hart before curling an injury-time effort just wide of the mark but in the end the earlier goal from Silva was enough to give Roberto Mancini's men maximum points to make it 13 wins from 16 outings ahead of the home clash with Stoke City on Wednesday.
TRIBAL ASKS: Man City get a much-needed clean sheet. Is the type of defensive performance they consistently require to win the league?
Etihad Stadium, Manchester - 47,303