Club World Cup: Manchester City crash out in stunning fashion
The match finished 2-2 at full-time but at the end of an eventful extra-time Marcos Leonardo grabbed the winner and pulled off one of the greatest wins in Middle Eastern football history.
The Saudi club advance to the quarter-finals where they will face Brazilian club Fluminense, ensuring a non-European team will reach the last four.
Manchester City had taken the lead in the ninth minute in controversial fashion, Bernardo Silva finishing after Rayan Ait-Nouri's cross.
Al Hilal players protested Ait-Nouri had controlled with his arm in the build-up but the goal stood.
Manchester City had plenty of opportunities to extend their lead before the break but a combination of poor finishing and inspired goalkeeping from Moroccan goalkeeper Yassine Bounou kept the lead at a single goal.
Al Hilal offered several reminders of their threat on the break, but Manchester City even more chances with Jeremy Doku volleying straight at Bounou who moments later reacted superbly again to keep out a Bernardo effort.
The question as to whether Manchester City would live to regret not converting those chances was answered within a minute of the resumption.
Former Manchester City full-back Joao Cancelo's low cross was parried out by Ederson, Malcolm pounced but saw his shot blocked by Ruben Dias only for the ball to loop to Marcos Leonardo to head home the equaliser.
Six minutes later and the Manchester City's high defensive line was exposed by a long ball from Cancelo which Brazilian Malcolm raced on to and he showed power and pace as he broke away before coolly slotting past Ederson.
The Saudi fans in the crowd went wild while Pep Guardiola responded immediately with a triple substitution with midfielder Rodri and defenders Nathan Ake and Manuel Akanji introduced.
That brought some much needed stability to a shaky back line, but Manchester City needed improvement at the other end too and it came, albeit in it scruffy circumstances.
The Al Hilal defence were unable to deal with a Bernardo corner and Erling Haaland pounced to steer home the lose ball and make it 2-2.
Manchester City piled on the pressure as they looked for the winner but yet again Bounou proved their nemesis as he denied Akanji and Ruben Dias and even when he was beaten by Haaland, substitute Ali Lajami produced a magnificent goal-line clearance.
Guardiola took off Haaland and introduced Egyptian forward Omar Marmoush as the game went into extra-time.
But for all Manchester City's depth, Al Hilal had a deep well of spirit to draw upon and just four minutes into the opening period Al Hilal regained the lead when Kalidou Koulibaly rose superbly to meet a Ruben Neves corner with a brilliantly angled header.
Manchester City responded with a goal of real quality when Rayan Cherki's brilliantly floated ball towards the back post was poked home masterfully by Phil Foden, at full stretch and from the tightest of angles.
But incredibly Al Hilal responded again to restore their lead – Sergej Milinkovic-Savic's header was saved by Ederson but Marcos Leonardo followed in to bundle the ball over the line.
As the celebrating Al Hilal fans poured out of the stadium, the Brazilian striker let his emotions pour out.
'I've had a difficult time in the last two months. My mother spent 70 days in the ICU,' he said.
'Today she's fine, thank God. When I scored those two goals, I thought of her. She was able to watch the match'.
Manchester City skipper Bernardo Silva said his team had paid the price for being unable to deal with Al Hilal's counter-attacking.
'We scored three and could've scored five, six. It was all about controlling when we lost the ball, controlling the transitions, don't let them run, and they ran way too many times,' he said.
'With one, two passes there was always a feeling of danger coming from them. When we allow teams to run like this we always suffer a lot, and today was the case,' he said.
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By Garrin Lambley © Agence France-Presse
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