Pep Guardiola's side needed to pick up all three points to ensure that second-placed Manchester United could not catch them in the final weeks of the season, but Chelsea recovered from one goal behind to secure an impressive win, boosting their top-four chances in the process.
The Citizens are now 13 points clear of Man United, who have two games in hand and can collect a maximum of 15 from their final five matches, while Chelsea have moved above Leicester City into third spot, six points clear of fifth-placed West Ham United.
Man City made the breakthrough in the 44th minute of the contest when Raheem Sterling converted from close range, taking the ball off Sergio Aguero in the process, after Gabriel Jesus had delivered a low cross.
Aguero had the chance to double the home side's lead from the penalty spot in the final exchanges of the first period, but the Argentine's Panenka effort was comfortably gathered by Chelsea goalkeeper Edouard Mendy.
The visitors improved in the second half and managed to level the scores in the 63rd minute when Hakim Ziyech expertly picked out the bottom corner with an effort from outside the box.
Next up for Man City is a trip to Newcastle United on May 14, while Chelsea will continue their top-four challenge with a home game against Arsenal on May 12.
12th min: Sterling is handed a yellow card for a rash challenge on Werner; VAR have a look at a possible red for the England international, but the booking stands.
32nd min: Chelsea have the ball in the back of the net as Werner converts from close range, but the offside flag is quickly raised, and it was an easy decision for the linesman.
33rd min: Werner breaks into a dangerous position for the Blues, but the Germany international can only curl his attempt harmlessly wide of the Man City goal.
35th min: Smart save from Mendy to keep out a strike from Sterling as the ball bounces kindly for the England international, who attempts to pick out the bottom corner of the goal.
43rd min: Good stop from Man City goalkeeper Ederson this time as he keeps out a strike from Ziyech; the ball then breaks for Rudiger, who fires over the crossbar from distance.
44th min: Man City make the breakthrough in the 44th minute of the contest as Sterling converts from close range after a mistake from Andreas Christensen. Gabriel Jesus appeared to have set up Aguero for the opener, but Sterling takes the ball off the Argentine's toes to break the deadlock.
47th min: Penalty for Man City as Gabriel Jesus is brought to the ground by Billy Gilmour, who stood his ground, but there was contact from the young midfielder, and VAR agrees with the referee.
48th min: Bizarre penalty from Aguero as he chips the ball down the middle and it lands straight into the arms of Mendy. Incredible finish to the first period at the Etihad Stadium.
63rd min: Chelsea level the scores in the 63rd minute of the contest as a mistake from Rodri in the middle of the park eventually leads to Azpilicueta feeding Ziyech outside the Man City box, and the attacker finds the bottom corner with a brilliant low strike to make it 1-1 at the Etihad.
71st min: Ilkay Gundogan's first touch sees the midfielder fire over the Chelsea crossbar from a dangerous area with Man City looking to regain the lead on home soil.
73rd min: James breaks clear down the right before delivering a wonderful low cross towards Werner, but the Germany international just cannot stretch to make the contact.
78th min: Gabriel Jesus works his way into a shooting position before poking the ball towards goal, but the effort is wide of Chelsea's post, leaving the score 1-1 approaching the final 10 minutes.
79th min: Werner again has the ball in the back of the net, but the forward is offside.
81st min: Hudson-Odoi has the ball in the back of the net for Chelsea this time after an excellent cross from James, but the offside flag is raised, and VAR just about confirms the decision.
82nd min: Wonderful challenge from Zouma to prevent Sterling from having a shot on goal as both teams continue to cause issues in the final third of the field.
88th min: Man City have a shout for a penalty as Sterling goes down inside the box under a challenge from Rudiger, but the referee is not interested, and VAR agrees with the official.
88th min: Alonso breaks clear for the visitors, but the wing-back chips the ball just wide of the post as Tuchel's side look to score a second in the final exchanges.
92nd min: Chelsea secure all three points at the death as Alonso finds himself inside the Man City box and manages to guide the ball over Mendy after a smart low cross from Werner.
MAN OF THE MATCH - REECE JAMES
James struggled to get forward for Chelsea in the first half of the contest, but the Englishman was simply excellent in the second 45 minutes as the visitors dominated for long spells.
The 21-year-old caused Benjamin Mendy all sorts of problems with his pace, strength and direct running, and he might have finished the match with a couple of assists had Werner been a little sharper inside the box.
Aguero's Panenka penalty in the closing stages of the first period was bizarre considering the circumstances. The Argentine had the chance to equal a Premier League record currently held by Wayne Rooney, who scored 183 Premier League goals for Manchester United.
Aguero was on 182 for the Citizens ahead of the match and that remains the case as he chipped the ball into the arms of the grateful Edouard Mendy, and there was not a serious chance for the experienced forward to make amends in the second period, meaning that Rooney still stands alone on 183.
Possession: Man City 49%-51% Chelsea
Shots: Man City 16-12 Chelsea
Shots on target: Man City 4-5 Chelsea
Corners: Man City 6-2 Chelsea
Fouls: Man City 12-10 Chelsea
MAN CITY (3-1-4-2): Ederson; Dias, Laporte, Ake; Rodri; Cancelo, Torres (Foden 70'), Sterling, Mendy (Zinchenko 80'); Aguero (Gundogan 71'), Jesus
CHELSEA (3-4-3): Mendy; Azpilicueta, Christensen (Zouma 45'), Rudiger; James, Gilmour, Kante (Jorginho 68'), Alonso; Ziyech (Hudson-Odoi 76'), Werner, Pulisic
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