Arsenal 2-1 Chelsea
Carlo Cudicini's calamitous error put Arsenal back on the Premiership summit and condemned Chelsea to their first league defeat of the season at Highbury.
The battle of London's championship contenders looked to be heading for a draw until Cudicini's dramatic mistake with only 15 minutes left.
Edu gave Arsenal a fourth minute lead before £17m Hernan Crespo scored a brilliant leveller almost instantly.
But Arsenal were effectively handed victory when Cudicini fumbled Robert Pires' cross fatally for Thierry Henry to put Arsenal in front.
It left Chelsea still seeking their first Premiership victory at Highbury after 12 visits and delivered the first serious dent to the growing title optimism at Stamford Bridge.
Chelsea were dealt a blow prior to kick-off when England defender John Terry was ruled out with a hamstring injury.
Mario Melchiot was drafted in and experienced an explosive start to the game as both the Premiership high-fliers hit the target.
KEY MOMENTS
4 mins: Edu's deflected free-kick puts Arsenal in front
7 mins: Hernan Crespo fires Chelsea level
75 mins: Carlo Cudicini presents Thierry Henry with Arsenal's second
Arsenal were without the suspended Patrick Vieira, but his replacement, Edu, put the Gunners in front after only four minutes.
Chelsea defender Glen Johnson was penalised for handball and Edu's 25-yard free-kick was deflected beyond Cudicini.
Ranieri's side responded within three minutes, levelling in spectacular style courtesy of Crespo.
It was a moment of sheer brilliance from the Argentine, who took Geremi's pass, left Lauren in his wake and fired a brilliant long-range drive into the top corner past a startled Jens Lehmann.
Arsenal and Chelsea were producing a contest worthy of the world-class talent on show, with play swinging from end to end.
Johnson tested Lehmann with a long-range effort - then Lauren attempted something similar for Arsenal but fired wastefully wide.
Cudicini needed to be alert after 35 minutes when he saved a shot from Henry that came through a crowd of players.
"It doesn't take millions to win the league - just good old talent and team spirit " From David Ng'ang'a.
But Chelsea almost ended the half in the ascendancy as Crespo had another opportunity but was off target.
Arsenal took control at the start of second half, but Chelsea still showed plenty of evidence to suggest they have the resilience to be serious title contenders this season.
Pires almost carved out an opening for Gilberto, but once again Cudicini was equal to the task.
And the Italian came to Chelsea's rescue again as time ran out, saving brilliantly from Henry - and from the resulting corner substitue Kanu struck the angle of post and bar.
But it was a dreadful error by Cudicini that gifted Arsenal the lead with 15 minutes remaining.
Dennis Bergkamp was having a major influence, and his quick free-kick caught Chelsea out.
But Cudicini appeared to have averted the danger by collecting Pires' cross, only to fumble the ball on to Henry and into the net.
--------------------------------------------------------------------------------
Arsenal: Lehmann, Lauren, Campbell, Toure, Cole, Parlour (Kanu 66), Silva, Edu, Pires (Cygan 90), Henry, Wiltord (Bergkamp 66).
Subs Not Used: Aliadiere, Stack.
Chelsea: Cudicini, Johnson, Melchiot, Huth, Bridge, Geremi (Hasselbaink 78), Makelele, Lampard, Duff (Cole 71), Crespo, Mutu (Gronkjaer 67).
Subs Not Used: Stanic, Ambrosio.
Booked: Makelele, Hasselbaink.
Attendance: 38,172
Referee: P Durkin (Dorset).
Arsenal 2-1 Chelsea: Arsenal's Edu opens the scoring after just five minutes when his low drive deflects off Ray Parlour
Edu's goal gives Arsenal a vital advantage in a must-win game for both sides
Chelsea respond almost immediately - Hernan Crespo blasts the ball into the net to equalise
Thierry Henry slots in the winner with only five minutes left to play when Chelsea keeper Carlo Cudicini fumbles a Robert Pires cross to gift the Gunners the points
Henry's goal provides a vital boost to Arsenal's title chances as they sit at the top of the Premiership table