With Manchester United losing 4-0 to Everton earlier in the day, Arsenal could have taken a giant leap towards a top four place.
Instead, they suffered a bitter blow in their bid for Champions League football next season, losing 3-2 at the hands of Crystal Palace.
Their first half performance was devoid of much creativity whilst their defending left a huge amount to be desired.
Christian Benteke opened the scoring after 17 minutes but Mesut Ozil hit back moments after half-time.
A defensive lapse then allowed Wilfried Zaha and James McArthur to score two goals in quick succession for Palace.
The Gunners fought back through Pierre-Emerick Aubameyang but it was too little too late as they suffered a first home defeat in the league since the opening day.
Story of the game
This game marked just over a year since Arsene Wenger decided he was going to depart the club so it was rather apt that on today of all days, Arsenal decided to play in a way that was reminiscent of the Frenchman's final years at the club.
The Gunners lacked any tempo and much of their first half display was dominated by backwards and sideways passing.
However, given Unai Emery opted to field a midfield two of Matteo Guendouzi and Mohamed Elneny it was hardly surprising. Both of them struggled against Everton a fortnight ago and it was the same story here on Easter Sunday.
It took just 17 minutes for Palace to open the scoring. Luka Milivojevic played a delightful free-kick in from the right and Benteke was there unmarked to head home. It was his first goal of the season, and his first in 358 days. Typical Arsenal.
There had been warning signs prior to that, though, with Scott Dann unmarked from another set piece, having the freedom of the penalty area to head it back across goal where Milivojevic fired over from close range.
Arsenal's attack was rather toothless but they did create some half chances of their own.
Ozil had to drop deep but he was at the heart of rare moments of quality going forward for the Gunners. He fired a tame effort straight at Vicente Guaita after a minute before an incisive pass later in the opening period nearly led to a chance for Alexandre Lacazette.
The hosts' best chances of the first 45 minutes came from Shkodran Mustafi and Elneny, but they both fired over from promising areas.
Palace ended the half the better of the two teams and if it wasn't for Arsenal's player of the month for March, Bernd Leno, they would have been 2-0 down. The German first went to ground to cut out a cross that was aimed at Benteke before then making a terrific double stop at his near post to deny Cheikhou Kouyate.
Emery has been no stranger to half-time substitutions and that was again evident at the break in this one, with Ainsley Maitland-Niles and Alex Iwobi replacing Konstantinos Mavropanos and Carl Jenkinson.
The Arsenal manager's team talk must have worked wonders because within minutes of the restart they were back level. Ozil linked up with Lacazette and the German found the back of the net with a trademark finish, bouncing the ball into the ground and past the Palace 'keeper.
There was far greater tempo to the Gunners play in the second half but it took a moment of madness from Mustafi just after the hour mark which allowed the visitors to go back in front.
A ball forward looked comfortable for the centre half to deal with but he let Zaha get past him as he gestured to Leno to come out and the Ivorian stole in and then fired home.
It was then soon 3-1 to Palace as a shell shocked Arsenal conceded again. Dann won the initial header from a corner and he then picked out McArthur who was unmarked at the back post to add a third for Roy Hodgson's men.
However, Arsenal came back fighting. Aubameyang showed excellent persistence down the right, coming inside before taking advantage of a lucky bounce to pick up a loose ball and then find the bottom corner of the goal to make it 2-3.
There was now a real intensity to the Gunners play and they were coming increasingly close to finding an equaliser. Ozil's cross from the right just bounced wide of the far post and then Iwobi could only place a tame attempt straight at Guaita from inside the area.
As hard as Arsenal tried, their efforts eventually came up short.
Mustafi has to be sold
If Arsenal fans didn't already hate Mustafi then they certainly will after this game. The German international has always been prone to an error but this was his biggest in Arsenal colours yet. He completely switched off and in a lack of communication with Leno allowed Zaha in for what was a pivotal goal.
Ozil shows what Emery has been looking for
At the turn of the year there was a big saga regarding Emery and Ozil. Had the pairing fallen out? It had seemed like it. But in recent weeks the creative midfielder has shown a different side to his game, one that Arsenal's head coach had been asking for. His mentality has certainly improved and the way he tracked back just moments after Arsenal had conceded a second was exemplary of his renewed work rate.
Has there ever been a more underwhelming Arsenal player than Elneny? The likes of Amaury Bischoff spring to mind and although the Egyptian isn't quite as poor as that he seems to offer nothing whenever he plays. His passing was sideways and he struggled to offer any penetration going forward. It was no surprise that he was eventually withdrawn for Lucas Torreira.
Wan-Bissaka excellent once again
The fact the Crystal Palace right back was left off the shortlist for the PFA Young Player of the Year award this weekend is now even more baffling. There isn't a better full back in one-on-one duels in the Premier League and that showed again on Sunday afternoon. He stepped in time and time again to deny Sead Kolasinac and Iwobi down the left flank.