Real Madrid advanced to the Champions League knockout phase and Manchester City's campaign ended in the group stage for the second successive season after the Spanish and English champions drew 1-1 on Wednesday.
City needed a win to keep its hopes alive going into the Group D finale, but Karim Benzema exploited sloppy defending to put Madrid ahead after just 10 minutes at Etihad Stadium.
City secured a lifeline in the 74th when Alvaro Arbeloa was sent off after fouling Sergio Aguero and the Argentina striker subsequently equalized from the penalty spot.
But Madrid held on for the draw to qualify with Borussia Dortmund, leaving City stranded at the bottom with just three points from five matches.
City's start belied the magnitude of the match for manager Roberto Mancini, whose expensively assembled side has been humbled in both of its appearances in Europe's elite competition.
And the Premier League leaders were made to pay after just 10 minutes when Angel Di Maria crossed from the right and Maicon failed to stop Benzema casually turning the ball in at the near post.
City was being tormented by Cristiano Ronaldo on his first appearance in the northern English city since leaving Manchester United three years ago.
The Portugal winger evaded Maicon and Pablo Zabaleta on the left flank before setting up Sami Khedira, who struck wide.
Ronaldo went close himself when he broke forward, and chipped the ball over Joe Hart after the City goalkeeper raced out to the edge of the area, but Zabaleta charged back and hacked the ball off the line.
It took around 20 minutes for City to put Jose Mourinho's side under any meaningful pressure, and when they did it took a fine save by Iker Casillas, who tipped over Aguero's shot.
There was also a break forward from Maicon, who had neglected his defensive duties but nearly made amends, playing a one-two with Aguero before striking wide.
City was also more assertive after the break, causing more trouble for the visitors.
Aguero looked most likely to grab the equalizer, with Maicon presenting him with a chance early in the second half that went wide.
City's attacking options were bolstered when Carlos Tevez replaced Samir Nasri on the hour.
But it was Aguero who came close again four minutes later.
After connecting with Maicon's cross from the right at the far post the net was at his mercy but Casillas managed to thwart the striker.
In the end, Aguero scored from the spot after Arbeloa was shown a second yellow card for bringing him down in the penalty area, giving City a lifeline.
But only a win would keep City alive in the Champions League, and the winner never came.
