Joao Cancelo was red carded after just 10 minutes, but goals from Ilkay Gundogan and Phil Foden looked to have put City on the way to a 13th Premier League away win in succession.
But the Seagulls, buoyed by a passionate home crowd, eventually made the extra man pay with three second-half goals to secure a first top flight victory over City for 40 years.
The evening began with a guard of honour from the Brighton players and a warm reception for the champions from the 8,000 fans inside the Amex.
The applause was reciprocated by the City players, but the friendly exchanges were forgotten within two minutes with a goal from Ilkay Gundogan.
Riyad Mahrez teased the full-back on he right before sending in a cross that was almost impossible to defend and Gundogan managed to get there first and head the ball past the keeper from close range.
It was the German international’s first goal in 10 games but his 17th of a memorable campaign.
The complexion of the match took a twist just eight minutes later when Joao Cancelo clashed with Danny Welbeck as the pair chased a ball towards the box and the referee decided the Portuguese had denied a goal-scoring opportunity.
It was questionable to say the least but it meant City would have to defend the lead with ten men for the remaining 80 minutes.
For the remainder of the first-half there was little incident of note, with City comfortably coping with the hosts attempts to up the ante.
The second half began with an explosive five minutes that saw both sides score.
City doubled the lead on 48 minutes with another goal for the Foden collection as he picked up the ball on the halfway line, out-paced Ben White before getting into the area where he fired a low shot across the keeper and into the bottom right corner for his 15th of the season.
Two minutes later, Leandro Trossard scored a fine individual goal to half the deficit and it was once again, game on.
There was concern as Ilkay Gundogan limped off after being caught by Adam Lallana, but hopefully his withdrawal was precautionary more than anything else.
The host, notably lifted by Trossard’s goal were knocking on the door for 15 minutes or more before Adam Webster thumped a header past Ederson on 73 minutes to make it 2-2.
Four minutes later and Dan Burn scrambled home what would prove to be the winning goal that ends City's long league winning away run.