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Arsenal's unbeaten run in this season's Champions League was brought to an end by a controversial first-half penalty as Inter Milan won at the San Siro.
The hosts were awarded a spot-kick seconds before the break when Mikel Merino was deemed to have handled the ball, although there was little he could do to move out of the way of Mehdi Taremi's flick on.
But the decision stood after a check by the Video Assistant Referee (VAR) and Hakan Calhanoglu confidently sent the penalty down the middle.
It was the first goal Arsenal had conceded in Europe this campaign but they still had plenty of time to equalise, and they went close after the break but Dumfries cleared Gabriel's header from a corner off the line.
Arsenal continued to dominate in the second half, with Inter goalkeeper Yann Sommer pulling off a superb one-handed save to keep out Kai Havertz's curling shot.
Havertz again went close as the Gunners pushed, this time seeing an effort blocked superbly by Yann Bisseck.
But Mikel Arteta's side suffered their first loss in four games in Europe this season, a result that leaves them 12th in the 36-team league.
It has been a tough couple of weeks for Arsenal in the Premier League where a run of three games without victory has left them fifth and seven points behind leaders Liverpool.
Their form hasn't been helped by a tough run of injuries with talismanic captain Martin Odegaard having been absent with an ankle injury since the end of August.
But the Gunners were boosted by his return to training this week and he was fit enough to take his place on the bench at Inter, where Arsenal were hoping to continue their strong form in Europe.
They were unbeaten in their three previous Champions League outings, which included an impressive 2-0 win against Paris St-Germain, but Inter posed arguably their most difficult challenge in Europe yet this season, having won seven of their previous eight games in all competitions.
Inter started strongly but, Arsenal were the better side.
In contrast to the defeat by Newcastle last weekend the Gunners created plenty of chances but were ultimately undone by the harsh penalty decision.
They were only denied a leveller by a number of excellent saves and last-ditch defending by the hosts.
Despite the loss there is encouragement for Arsenal to take from this performance as they look to reignite their faltering Premier League campaign, particularly with some key injured personnel returning.
While Odegaard's introduction two minutes into stoppage time was not enough to influence this result, his appearance will give Arsenal fans hope he will be more involved against Chelsea in the league on Sunday.
Watch highlights of every Champions League game from 22:00 GMT on Wednesday on BBC iPlayer and the BBC Sport website and app.
There will also be a Champions League Match of the Day on BBC One on Wednesday, from 22:50 to 00:10.
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