Only six minutes remained when Roque Santa Cruz netted their late equaliser, a near-post header from a David Bentley cross, although it was initially ruled out by a referee's assistant.
It was only after referee Howard Webb had consulted with his fellow official that the goal was awarded and City's remarkable run of nine successive home league victories was at an end.
And it was a case of the Blackburn jinx striking again as City have now beaten the Ewood Park side only once in their last 11 meetings.
Indeed, Blackburn have never lost at Eastlands in five visits to City's new home which has proved a lucky ground.
City had appeared to have victory secured after first-half goals from Darius Vassell and Ryan Nelsen, who scored in his own net.
Blackburn, despite only having one win in their previous nine league and cup games, showed a never-say-die spirit to twice battle from behind and snatch a point.
City decided to rest Elano and Dietmar Hamann, who were both on the bench, as manager Sven-Goran Eriksson clearly had Sunday's visit of Liverpool in mind.
After an uninspiring opening, City striker Rolando Bianchi was guilty of one of the misses of the season midway through the opening half, failing to connect from two yards with the goal at this mercy following a cross from Martin Petrov.
And when the deadlock was finally broken it signalled a goal rush of three in as many minutes.
City struck the first blow in the 27th minute when Vassell rose unmarked at the far post to head home Petrov's cross for his second goal of the season.
Blackburn were on level terms within a minute when Santa Cruz stole in at the near post to head home David Bentley's free-kick.
City regained their composure and the lead on the half hour with Petrov again the provider on the left and Nelsen, sliding in to cut out his cross, could only divert the ball past keeper Brad Friedel.
Blackburn brought on Benni McCarthy to partner Santa Cruz up front at the break, as Brett Emerton switched to the problem right-back spot with Zurab Khizanishvili being taken off after being given a grilling by Petrov.
Mark Hughes' tactical rejig tightened things defensively and Rovers were far more solid at the back in a hard fought second half of few clear chances.
With time running out came the goal from Santa Cruz, his 13th of a superb first season in the Premier League, which ended City's perfect record at home this season.