Harry Anderson’s 77th minute low drive looked to have earned the Imps both the win – and top spot in the group.
But Keke Simmonds' bagged a deserved 89th minute leveller after Felix Nmecha's shot had squeezed through the Lincoln keeper's grasp to set up a penalty shoot-out.
That set up a penalty shoot-out to decide who claimed the extra point and it was Lincoln who prevailed 4-3 after Simmonds' fifth spot was saved.
However, the point from the draw was enough to ensure that Enzo Maresca's side took top spot on goal difference from Lincoln with both sides finishing on seven points.
With both City and Lincoln having already sealed their ticket through to the knockout stages, the Group E finale was more about the bragging rights as to who claimed top spot.
The high-flying League One outfit represented the toughest test yet for Enzo Maresca’s youngsters – especially with City deprived of a host of players due to international commitments.
However it was City who made the brighter start as we almost charged into a third minute lead.
After an errant Lincoln back pass, Keke Simmonds latched on the loose ball and cut back to the waiting Felix Nemcha in the middle of the box, but the skipper couldn’t direct his shot on target
Four minutes later, Lincoln almost answered in kind, Tayo Edun’s pin-point left wing cross finding the unmarked Tom Hopper who sent his header straight at Cieran Slicker.
The action was already end-to-end with Braaf’s charge opening up space and Simmonds lashing a low shot straight at Lincoln keeper Ethan Ross.
City looked a threat every time we went forward with our movement and fluid passing causing no end of headaches for the Imps.
Claudio Gomes, deployed in the unfamiliar role of centre half, then drilled a superb 50-yard ball into the path of Braaf but the winger couldn’t gain the necessary purchase on the shot as he closed in on goal.
Lincoln though were also dangerous going forward and it needed a last-ditch block from Callum Doyle to divert a threatening cross from Harry Anderson just wide of Slicker’s near post before, on 41 minutes, City then carved out the best chance of the first half.
Oscar Bobb cut inside from the left after Maresca’s side worked a clever overlap and found the waiting Simmonds.
The striker shimmied inside but his shot was half blocked and bounced agonisingly wide of the gaping goal with the onrushing Ben Knight unable to convert before it went out.
Romeo Lavia then came to City’s aid after a rush of blood by Slicker. The keeper raced out of his box to the right touchline aiming to punt clear but completely missed his kick and as the ball was squared back to the waiting Edun to convert, Lavia slid in to produce a crucial clearance.
The hosts sought to up the tempo after the break seeking to press higher up the field but it was City who threatened first, Lincoln keeper Ross making brave save to deny the onrushing Simmonds.
City then spurned a golden opportunity. After a patient move, Bobb deftly made space and found the unmarked Bernabe inside the 18-yard box but the Spaniard miscued his effort.
However, it was Lincoln who finally made the breakthrough on 77 minutes.
Knight’s pass back was intercepted by Archibald, he found the waiting Harry Anderson 15 yards out and he drilled a low shot past Slicker into the bottom left corner.
Slicker then performed heroics to dive low and superb block Cono McGrandles' powerful close range shot.
That looked to be it until, with a minute left, City deservedly drew level.
Felix Nmecha's shot appeared to be saved - but the ball squeezed through the keeper's grasp, trickling towards the line and Simmonds was there to apply the finish and send the tie to penalties.
After James Jones and Darko Gyabi both missed for either side, Simmonds then saw City's fifth spot kick saved to earn the hosts a 4-3 spot-kick triumph but City can take great heart from their night's work.
How we lined up
Cieran Slicker was in goal and shielded by a back four of Sammy Robinson, Callum Doyle, Claudio Gomes and Adrian Bernabe. Skipper Felix Nmecha (C), Romeo Lavia and Oscar Bobb were the midfield trio with Keke Simmonds, Ben Knight and Jayden Braaf deployed up-front.
What it means
Both City and the Imps progress from Group E into the knockout stages and will go into the hat for the round of 32 draw of the Papa John’s Trophy which will again be regionalised.
The draw is due to take place later this week and City will again play away in the round of 32 with ties due to be played on the week commencing December 7th.
Following the international break, City make a return to PL 2 action on Sunday when we play host to Chelsea Under-23s at the Academy Stadium.
Kick-off is 1pm and the game will be televised live on CITY+.