The Cityzens made ten changes to their starting line-up for the Seagulls clash with Ayyoub Bouaddi being the only player to retain his place from the midweek Carabao Cup win over Brighton.
City dominated the opening stages of the match but failed to test Brighton keeper Bart Verbruggen often enough on a disappointing afternoon at the Etihad.
The visitors took the lead in the 11th minute when a low cross was missed by Matheus Nunes, the ball hit Maxim De Cuyper's shin and bounced into the path of Yasin Ayari who had a simple tap-in from six yards.
City had at least three penalty appeals for handball that were dismissed by referee Craig Pawson in a what was a largely frustrating first period.
At the hour mark Matheus Nunes was sent clear of goal, but his low shot was well saved by Verbruggen in what the best chance for his side was to equalize in the half.
The home side dominated possession in the second half but could not find an equalizer with Nico O'Reilly's 90th minute header missing an empty net and a chance to share the points.
Manchester City have now lost two matches in a row in the Premier League and will be looking to bounce back in their next clash against RB Leipzig in the UEFA Champions League group phase.
Tottenham continued their resurgence under Roberto De Zerbi with a 2-0 Premier League victory over Crystal Palace, extending their winning streak to three matches and climbing into the top half of the table.
Manchester United's crisis deepened after they suffered a 2-0 defeat to Chelsea at Stamford Bridge, extending their winless run to nine matches in all competitions and increasing the pressure on manager Michael Carrick.
Youri Tielemans has thrown his support behind Michael Carrick, insisting Manchester United need stability rather than another managerial change as they attempt to turn around their poor start to the season.
Arsenal manager Mikel Arteta has backed Kai Havertz to make an impact against Liverpool, insisting the forward remains an important figure in his plans despite his recent goalscoring form.
