Schalke piled on the misery for Arsenal as the German side struck twice in the closing stages to clinch a shock 2-0 win in Wednesday's Champions League clash at the Emirates Stadium.
Dutch duo Klaas-Jan Huntelaar and Ibrahim Afellay netted in the final 14 minutes to deal another significant blow to Arsene Wenger's team just days after they crashed to a dismal 1-0 defeat at Premier League strugglers Norwich.
Wenger could have few complaints about the result as Arsenal paid the price for a lacklustre display that saw them out-fought and out-thought for long periods, while Schalke coach Huub Stevens said his team deserved the win.
"We did not start well and I wasn't at all satisfied with the first half," admitted Stevens.
"We were far too afraid and always a step behind, but we put in a good second-half performance and deserved the win."
The Gunners' 100 percent record in Group B was shattered in emphatic fashion and they are now behind Schalke in second place, with tricky trips to the German club and Olympiakos among their remaining three fixtures as they try to edge into the last 16.
To make matters worse for Wenger, he is due to attend the club's annual general meeting on Thursday, with already angry shareholders likely to make their feelings known.
"We are really disappointed," Arsenal captain Thomas Vermaelen said. "We lost on Saturday and wanted to be better today but it was the same story.
"We didn't create enough chances to score. We gave 100 percent but it was hard to break them down. These moments are difficult but you have to work hard."
France striker Olivier Giroud, replaced by midfielder Francis Coquelin, was the only casualty from the Norwich embarrassment as Wenger opted against making wholesale changes and gave his flops a chance to make amends.
How he must have rued that decision after his side were booed off.
Watching from the Arsenal directors' box as he completed his three-match European touchline ban, Wenger cut an anxious figure as Schalke opened up with some slick approach play.
After Gervinho squandered an early chance for Arsenal, the Ivorian shooting well wide after good work from Lukas Podolski on the left flank, Schalke had a strong appeal for a penalty controversially turned down.
Jefferson Farfan played in Afellay and, seizing on hesitation from Carl Jenkinson, he poked the ball past sliding Arsenal goalkeeper Vito Mannone, who made no contact with the ball as he caught the forward with his arms.
Afellay tumbled to the turf and turned to demand a penalty, but Swedish referee Jonas Eriksson responded by booking the Schalke star for diving.
Schalke were probing away intelligently around the Arsenal penalty area and Huntelaar should have done better when he tried to steer Atsuto Uchida's cross goalwards in the final moments of the first half.
Schalke's poor finishing let Arsenal off the hook again early in the second half when Farfan skipped past Andre Santos and cut a pass back to unmarked skipper Benedikt Howedes, who had the goal at his mercy but blazed high over the bar from just 10 yards out.
There was alarmingly little response from Wenger's team, who seemed to lack the belief or the will to wrestle the initiative away from Huub Stevens' men.
It didn't help that Gervinho repeatedly picked the wrong option whenever he had a chance to drive at Schalke's defence and the striker earned a booking after throwing himself to the floor in a desperate bid to win a penalty.
Gervinho departed to sarcastic cheers from the home fans when Giroud was sent on to replace him with 15 minutes left.
But Arsenal's supporters were venting their frustrations even louder moments later as Huntelaar broke the deadlock in the 76th minute.
Huntelaar netted 48 times in 47 games for Schalke last season and he ruthlessly exposed Arsenal's defensive frailties with a clinical finish after Per Mertesacker and Vermaelen reacted slowly to Afellay's looping header.
That forced the hosts to throw players forward in search of an equaliser and Schalke picked them off again when Farfan got away down the left and crossed for Afellay to slot home from close-range in the 86th minute.