Manager Stuart Pearce will still be wondering how his side managed to lose a game they completely dominated.
It was very much a case of smash and grab as Bolton rode their luck to pick up a victory which lifts them into fourth place.
City were denied four times by the woodwork and also by the brilliance of Bolton's Finnish keeper Jussi Jaaskelainen, who saved his side on numerous occasions.
Then in the third minute of injury time Bolton won a penalty as Richard Dunne needlessly handled a Henrik Pedersen cross, enabling Gary Speed to score from the spot.
City had been attempting to match the 14-match unbeaten run they managed in 1976-77 when they finished runners up to Liverpool in the old First Division.
And once again it was a case of the Manager of the Month curse striking as Pearce had been presented with his award for August before kick-off.
Antoine Sibierski stepped in for Andy Cole who sustained a hamstring injury in training, the only change City made from the Manchester derby.
Bolton had a new look team, making five alterations from the line-up which beat Lokomotiv Plovdiv three days earlier on their UEFA Cup debut.
Manager Sam Allardyce fielded a weakened side against the Bulgarians insisting the match against City was more important.
Kevin Nolan, Speed, Kevin Davies, Abdoulaye Diagne-Faye and Tal Ben-Haim all returned in a 4-3-2-1 formation.
Sibierski forced the first serious save of the match in the 13th minute when he was denied by Jaaskelainen's athleticism.
It was then the turn of City's David James to keep out Davies' effort, though the striker ought to have scored with a free header from eight yards.
City were forced to make an early change when, midway through the half, Trevor Sinclair was taken off on a stretcher with a twisted knee and replaced by Sun Jihai.
Sibierski, eager to seize on his rare starting spot, was thwarted by the woodwork with an excellent header from just inside the penalty area.
And the Frenchman was denied for a third time as Jaaskelainen did well to tip his header over the crossbar late in the half.
Bolton were saved by the woodwork for the second time soon after the restart when Joey Barton's drive hit the upright to the left of Jaaskelainen.
City were then thwarted by the outstretched leg of Jaaskelainen when the keeper produced a remarkable save to keep out Claudio Reyna's close-range shot.
City were denied by the woodwork yet again just short of the hour when Kiki Musampa's thunderous drive clipped the top of the crossbar.
Pearce brought on Stephen Ireland in the 81st minute and he almost immediately covered himself in glory with a terrific drive which Jaaskelainen again kept out with another superb save.
The hosts then struck the frame of the goal for a fourth time when Jihai's angled shot crashed against the crossbar.
The China defender looked to the heavens in disbelief and Pearce also shook his head as that proved more than anything it was not going to be City's day.
And that came true in the third minute of stoppage time when Pedersen crossed from the left only for the ball to strike the outstretched arm of defender Dunne.
Referee Mike Dean pointed to the spot to the disbelief of the City fans and Speed fired home the penalty.