Arsenal, the Premier League leaders, were defeated by PSV Eindhoven in the Netherlands, denying them the top spot in Europa League Group A.
The Gunners only needed a point to advance to the last 16 in the Europa League.
However, Joey Veerman’s first-time finish from 16 yards and a header by substitute Luuk de Jong – following a mistake by keeper Aaron Ramsdale on his European debut – saw Mikel Arteta’s side lose for the first time this season in Europe.
PSV, managed by former Manchester United forward Ruud van Nistelrooy, had three goals disallowed for offside as Arsenal were soundly defeated.
To guarantee a place in the last 16, Arsenal must defeat Zurich in their final group game next Thursday at Emirates Stadium.
If Arsenal fails to win and PSV defeats Bodo/Glimt in Norway, they will be forced to play two extra games in the knock-out round play-offs, which teams finishing third in the Champions League group stage.
Arsenal have now lost their last two games after winning eight straight matches in all competitions.