United's second string were overturned by their Arsenal counterparts in the Platinum One Challenge.
Having comfortably beaten Shamrock Rovers last Sunday, the Reds' hopes of wrapping up the tournament with victory were dashed by the Gunners. Jay Emmanuel-Thomas' penalty and a strike from Wellington Silva put Arsenal two goals clear, and Kiko Macheda's strike on 70 minutes proved no more than a consolation.
Both sides traded efforts in an entertaining start to the game. Scott Wootton's header was beaten away by Gunners goalkeeper James Shea, before Ben Amos triumphed in a one-on-one situation with Henri Lansbury.
Amos was helpless to prevent Arsenal taking the lead from the spot, however, as Emmanuel-Thomas confidently converted after Wootton's foul. Will Keane flashed a header wide from Tom Cleverley's cross as United looked to hit back, but the Gunners always appeared more likely to trouble to the scoreline. Shortly after half-time, they did.
Brazilian youngster Silva sped down the right flank and fired home the clinching goal within two minutes of the restart. But for the sterling efforts of Amos, who again thwarted Emmanuel-Thomas in a one-on-one, United could have been overwhelmed.
Instead, the Reds continued to chip away at the Gunners' well-organised defence and found a way through in the 71st minute. Macheda engineered room and unleashed a powerful effort which Shea could only parry, and the Italian tucked away the rebound to tee up an unlikely comeback for Ole Gunnar Solskjaer's side.
Arsenal could have added to their lead with several counter-attacks as United poured forward, but in a tense finish the Reds came no closer to equalising than with Cleverley's shot, which was deflected narrowly off-target.
United starting XI: Amos; Fabio, Wootton, Gill, Dudgeon; Norwood, Eikrem, Cleverley, Brady; Macheda, Keane.