Despite taking an early and deserved lead through James McAtee, it was soon cancelled out by an Ethan Galbraith penalty minutes later.
The game was then flipped on its head ten minutes before the break as Adrian Bernabe was given a straight red card after colliding with United scorer Galbraith.
This allowed United to take advantage, as they took the lead just two minutes later through Facundo Pellistri.
Despite being down to ten, City fought back and levelled things up through Taylor Harwood-Bellis to make sure the points were shared in an exciting Manchester derby.
It was a fast start from Enzo Maresca's side and our early pressure was rewarded just seven minutes in as McAtee opened the scoring.
Some neat play down the left between Adrian Bernabe and Felix Nmecha led to a ball across the United box, finding McAtee who calmly slotted home from 10 yards for his second Premier League 2 goal in two games.
City and McAtee did not stop there and just moments after the opener, nearly added a second. After a marauding run, the 18-year-old saw his low effort from the edge of the box tipped round the post by Paul Woolston.
Despite our early dominance, our lead was cut short as the hosts were level five minutes later after Luke Mbete was adjudged to have fouled Hannibal Mejbri in the penalty area.
Ethan Goldbraith then stepped up for United and converted from 12-yards to level things back up.
City looked to hit back straight away after being pegged back, and came agonisingly closed to regaining the lead with 20 minutes on the clock.
Nmecha picked up the ball on the left before cutting inside and unleashing a curling effort from 20-yards - a whisker wide of Woolston's far post.
Despite our control, things then took a sharp turn as Bernabe was sent off after a late collision with United goal scorer Goldbraith.
Things then went from bad to worse for Maresca's men as the hosts made use of their man-advantage almost instantly.
A ball across the box from Ethan Laird found Facundo Pellistri, who bundled home from close range to put the hosts ahead at the break.
Despite the setback, we clawed ourselves right back into the game just after the restart as Harwood-Bellis levelled things up. A trademark Tommy Doyle corner was met by Harwood-Bellis, and he slotted home on the volley for his first goal of the season.
The City defender's equaliser set up an enthralling final 30 minutes at Leigh Sports Village as both side hunted for a winner.
Cole Palmer came close with his first effort of the afternoon as he beat Brandon Williams, before seeing his effort unconventionally palmed away by Woolston.
Just minutes later, Woolston once again proved to be United's saviour with a superb double save.
A looping Doyle free-kick was met by the head of Liam Delap, forcing a good stop. The rebound was then diverted to goal from Mbete. However, the United shot-stopper was there once again to keep his side level.
Woolston's heroics did not stop there as City continued to dominate. McAtee came close to his second, and his side's third. However, his curling effort from 10 yards was tipped over by the United number one.
Woolston was no doubt United's man of the match in this one but he was very nearly caught out by some McAtee magic - 50 yards from goal, as the City scorer hit a lobbed effort from just inside the United half that sailed over the head of the United keeper only to crash against the post.
In the final moments, Woolston once again came to the hosts rescue as substitute Morgan Rogers broke through - only to be denied from close range by the United 'keeper.
HOW WE LINED UP
Liam Delap led the line upfront.
WHAT IT MEANS
The draw sends us back to the top of the Premier League 2 table on goal difference ahead of Blackburn Rovers.
Maresca's men return to league action on Monday 21 December, taking on West Ham United at the Academy Stadium at 13:00 (UK).
News about Man United v Man City
Full-match replay: United U23s 2-2 City EDS
Manchester City's Elite Development Squad played out an enthralling 2-2 draw with Manchester United at Leigh Sports Village after being reduced to 10-men 35 minutes in. Watch more.