They went ahead through Ruud van Nistelrooy in first-half injury-time, but could not hold onto the three points, with Joey Barton equalising for City 14 minutes from time.
United were lacklustre against a well-organised City side which is making giant strides under the guidance of Stuart Pearce.
The Red Devils, with most of their side away on international duty over the last week, looked relieved when they went ahead in the dying seconds of the first half.
Wayne Rooney, whose phenomenal work-rate was one of the pluses for United, tapped a free-kick 30 yards out to Paul Scholes.
United's stand-in skipper hit a crisp shot which took a deflection off City captain Sylvain Distin to land in van Nistelrooy's path.
The Dutchman, marginally on side, hit a fierce drive from 12 yards which was brilliantly clawed away by City goalkeeper David James.
But the visitors were unlucky when the rebound from James landed invitingly for van Nistelrooy to slot a shot home from eight yards.
City had defended well in the first half without ever threatening their neighbours.
Park Ji-Sung went close for the hosts in the tenth minute when good work by Alan Smith and Rooney created an opening for him on the right side of the City box. The South Korean fired in a powerful drive from 15 yards, but the ball fizzed just wide of the far post.
United put together a glorious move in the 20th minute. Darren Fletcher found Gabriel Heinze on the left. His cross to the far side of the City box was headed back by John O'Shea for Scholes to fire narrowly wide from 10 yards.
Van Nistelrooy missed a good chance when he flicked a ball over the bar from six yards after being set up by a Park pass.
The first-half goal failed to spark real life into United and City came more into the game after the interval.
City's former United hero Andrew Cole failed to control Claudio Reyna's cross from the right and his effort went wide.
At the other end, James produced an acrobatic league to keep out Rooney's free-kick from the left, while Trevor Sinclair's last ditch tackle denied Scholes.
United's vulnerability in failing to kill of the game came back to haunt them in the 76th minute.
The home side failed to clear Sinclair's cross from the right and Cole pounced to fire in a shot from ten yards which was superbly saved by home goalkeeper Edwin van der Sar.
The ball rebounded to Darius Vassell just inside the penalty area and his low shot looked to be covered by Rio Ferdinand on the United line until Barton's late touch guided it over the line.
It could have been even worse for Sir Alex Ferguson's side almost three minutes into the injury time. Sinclair beat Heinze on the right and his cross into the box was superbly met by Cole, whose screaming volley from ten yards was turned over the bar by the fingertips of van der Sar.
Man of the Match: Wayne Rooney
The youngster had a point to prove after his petulant display for England in midweek and went someway towards doing it with a hard-working showing that deserved better reward than a point.