James Milner's penalty had given the away side a second-half lead just minutes after the interval, only for Sergio Aguero's clinical finish to level things up with just over 20 to play.
Big chances went begging for each side in the time that remained, with the eventual draw seeming a fair result for a superb match.
Dejan Lovren and Divock Origi were deemed fit enough to make the visitors bench having been injury doubts, whilst Pep Guardiola brought Yaya Toure back into his side, moving Fernandinho to right-back in place of Bacary Sagna.
The changes seemed to do City good effect, as they unsettled Liverpool in the opening period of the game.
City start well before referee hits the headlines
Raheem Sterling's pace was troubling James Milner whilst Leroy Sane was equally enjoying himself against Nathaniel Clyne, a run down the left leading to the first meaningful chance of the game falling for David Silva.
Mignolet stopped Sane's effort as the ball fell kindly for Silva, who sent Mignolet back the wrong way as he fired towards the top left corner, the ball dropping just over the bar.
That chance seemed to spark a flurry of incidents, many of which referee Michael Oliver found himself at the heart of.
Yaya Toure was lucky to stay on the pitch after some stray studs went upright into Emre Can's shoulder after the German won a 50-50, but that was nothing compared to the pressure heaped on Oliver in the cluster of penalty appeals that followed.
Sadio Mane capitalised on some poor defending by Otamendi to get ahead of the Argentine and in on goal, but wanted a penalty after he slowed down and contact was made between the pair. The general consensus seemed to be that no decision was the correct one, Mane punished for failing to shoot earlier.
There were then more half-hearted shouts for a spot-kick as Georginio Wijnaldum went down in a crowded box after some fantastic footwork saw him skip past Toure. However, any challenge on the Dutchman was minimal.
That appeal was nothing compared to one that followed at the other end, Raheem Sterling and then Fernandinho seemingly fluffing their lines when Sane whipped in a fantastic low cross.
However, replays showed that contact from Milner was made on Sterling, impinging the winger as he looked to tap the ball in. Still nothing was given.
Liverpool responded to that scare by bounding up to the other end and winning a corner as Roberto Firmino forced Willy Caballero into a save, leading to a succession of dangerous corners as good work by the 'keeper kept City level, including a fine reflex save from an Adam Lallana strike.
Milner silences Etihad
A penalty decision would finally come shortly after the interval, in favour of Liverpool as they were presented with a chance to go ahead.
Emre Can's pass over the top for Firmino was wonderful, but it was the slip and resulting rash challenge from Gael Clichy that would do for City, the Frenchman barging into Firmino and taking the man as well as the ball, Oliver pointing towards the spot.
Under the pressure of 40,000 boo's, Milner stepped up confidently to send Caballero the wrong way, putting Liverpool ahead.
It could have been two minutes later as Philippe Coutinho released Firmino with a nice pass whilst the City back-line attempted to step up, but Caballero was off his line to save well.
Aguero levels as game goes crazy
Liverpool were looking dangerous on the counter, however they continued to drop back to combat City's need to attack, something that cost the Reds when Sergio Aguero netted an equaliser.
Some tactical shifting from Guardiola aided the Citizens as De Bruyne, a fantastic crosser of the ball, picked it up in room on the right, angling a superb ball low into the penalty area which Aguero applied a superb first-time finish to.
That swung the momentum well in the hosts favour, City getting a second wind in adversity of the weary legs brought on by Wednesday's European exploits in France.
It really should have been 2-1 when Aguero rode two challenges and linked up with Sane in the area, falling when challenge as he attempted to shoot from yards out, the ball breaking to De Bruyne who clanged an effort against the post.
However, De Bruyne's miss was nothing compared to that of Adam Lallana minutes later, the midfielder missing a golden opportunity to cap off a devastating counter.
Golden chances to win it missed
Breaking quickly, Lallana drove forward, giving it to Firmino who in turn found Wijnaldum, the Dutchman dinking the ball back over the top to Firmino, he then found Lallana unmarked in the middle of the six yard box to tap in, only for Lallana to slice his effort horrible wide.
Up at the other end, with the game being played at an extraordinary pace even after 80 minutes, David Silva scooped a unique ball over Liverpool head's, Sterling nipping the ball over Simon Mignolet but wide of the goal.
City would be the next to go close, in a battle for which defence could look more suspect, Aguero shooting wide at the near post after Silva's low cross.
Mane had a chance to burst past John Stones after a City mistake in the middle, the defender reacting well to slide in and tackle.
Unsurprisingly, City responded with an attack of their own as the clock rolled into stoppage time, Aguero showing an unusual lack of composure as he volleyed over following De Bruyne's cross.
That proved to be that, both teams left to regret missed chances as they took a point each.