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Pep Guardiola's City have 69 points with Liverpool on 66 but City can restore their advantage to six when they travel to Crystal Palace on Monday.
Liverpool narrowed City's lead at the top to three points with both teams having 11 games left to play.
Both sides could claim to have been deserving winners in a classic free-flowing encounter full of goalscoring chances, remarkable saves and four disallowed goals.
Mohamed Salah and Luis Diaz allowed Juergen Klopp's Liverpool to close the gap to six points at the top, and they also have a game in hand over City.
Roberto Firmino and Mohamed Salah earned Liverpool a 2-0 victory at San Siro.
Arsenal claimed a first win in six matches in all competitions with defender Gabriel scoring the only goal in 1-0 victory at Wolverhampton Wanderers.
Salah's Liverpool teammate Sadio Mane led Senegal to their first ever Africa Cup of Nations title on Sunday.
Klopp's team posted 3-1 win over Crystal Palace.
Leeds United pulled eight points clear of the relegation zone with a 3-1 win over Burnley.
Liverpool had a host of chances, including a Mohamed Salah penalty, but failed to score in the Premier League for the first time in 29 games.