
Arsene Wenger's side were on course to qualify for the knockout stage of Europe's elite club competition for the 15th successive season after Mikel Arteta's penalty and fine strikes from Alexis Sanchez and Alex Oxlade-Chamberlain put them in complete control by the 58th minute.
But the Gunners' creaky defence was brutally exposed by Anderlecht in a remarkable finale that saw the Belgians score three times in the last 29 minutes to stun the Emirates Stadium into silence.
Anthony Vanden Borre sparked the incredible revival with a tap-in from an offside position and he then netted a penalty before Aleksandar Mitrovic's stoppage-time header completed the heroic comeback.
"We had some bad luck, the first goal (for Anderlecht) was offside but we had a lack of concentration and thought the game was won," Wenger said.
"Overall we were poor defensively from the first to the last minute.
"Am I angry or disappointed? Both."
Anderlecht boss Besnik Hasi added: "We come from a small league but we have shown for the second time against Arsenal that we can compete against these big teams."
The north Londoners -- now five points behind Group D leaders Borussia Dortmund -- are likely to have to settle for second place and a tougher draw in the last 16, assuming they can guarantee qualification in their final two matches against Dortmund and Galatasaray.
Hasi's side must have feared it wouldn't be their night when they arrived at the stadium less than an hour before kick-off after the team bus was stuck in heavy traffic.
But they showed no signs of being affected in the opening moments and Dennis Praet fired in a low strike that deflected off Per Mertesacker and flashed just past a post with Gunners goalkeeper Wojciech Szczesny wrong-footed.
Anderlecht had outplayed Arsenal for long periods despite losing in Belgium two weeks ago and they threatened again, with Sacha Kljestan skipping through the hosts' defence to force Szczesny into a good save. AFP