- US international Eric Lichaj opened the scoring for the home side with a header midway through the first half but Per Mertesacker equalised for the away team just three minutes later.
- Wenger, serving a touchline ban, was forced to watch powerless from the stands as Rob Holding conceded a penalty that teenager Ben Brereton converted in the 64th minute to stretch the home side's lead to 3-1.
FA Cup holders Arsenal were sensationally dumped out of the competition by Nottingham Forest on Sunday, joining Leeds United as big-name casualties on a day of shocks.
Elsewhere, West Ham stayed alive with a goalless draw at Shrewsbury and Tottenham scored three goals in eight second-half minutes to see off the challenge of League One side AFC Wimbledon.
Championship side Forest revived memories of their glory years under Brian Clough, putting 13-times winners Arsenal to the sword in an incident-packed 4-2 win at the City Ground.
Arsenal boss Arsene Wenger, who made nine changes to the side that drew with Chelsea in the Premier League in midweek, defended his team selection for the third-round tie.
"We have many players on the edge and we play again on Wednesday," he said. "When you don't win the selection is always questioned.
"I believe we had an experienced team -- eight or nine internationals. It would be easy to think that was the problem.
"When you're against a team like that they're very difficult to beat. Defensively you cannot afford the mistakes we made."
US international Eric Lichaj opened the scoring for the home side with a header midway through the first half but Per Mertesacker equalised for the away team just three minutes later.
However, Forest continued to probe an inexperienced Arsenal line-up and got their reward just before half-time when Lichaj volleyed in spectacularly from the edge of the box.
Wenger, serving a touchline ban, was forced to watch powerless from the stands as Rob Holding conceded a penalty that teenager Ben Brereton converted in the 64th minute to stretch the home side's lead to 3-1.
Danny Welbeck gave Arsenal hope with just over 10 minutes to go but Kieran Dowell netted from the penalty spot again to seal victory for the second-tier side over the Premier League visitors.
In a breathless final few minutes Forest's Joe Worrall was sent off but it was too late for Arsenal to take advantage.
Nottingham Forest's caretaker manager Gary Brazil said the result was something the former European champions could build on.
"This football club should be playing against the Arsenals of this world, and they should be beating them," he added.
"These fans deserve to be watching Premier League teams and that's what we've got to drive towards."
- Leeds shock -
In the early kick-off, on-loan forward Shawn McCoulsky headed in a dramatic 89th-minute winner for Welsh club Newport County to seal a 2-1 victory against 1972 Cup winners Leeds.
Leeds had taken an early lead at Rodney Parade when Gaetano Berardi's deflected long-range shot found the net.
But Newport, currently 11th in League Two -- the fourth tier of the English game -- levelled 14 minutes from time when Leeds defender Conor Shaughnessy sliced into his own net.
Infused with fresh belief in front of a passionate Welsh crowd, Newport pressed for a winner, and with a minute to go on-loan substitute McCoulsky rose highest at a corner to head in the decisive goal and send the stadium into raptures.
"This is much better beating Championship teams like Leeds," said Newport manager Michael Flynn. "I don't want to be winning relegation battles, I want to be winning FA Cup ties and climbing the table."
- Hart saves -
West Ham had goalkeeper Joe Hart to thank for keeping them in the Cup with a 0-0 draw after an uninspired performance against Shrewsbury Town of the third tier.
The England goalkeeper, returning to the club where he started his career, made a fine save from Mat Sadler with about 10 minutes to go until the interval and repeated the trick against Alex Rodman.
"The players are a little bit deflated almost," said Shrewsbury Town manager Paul Hurst.
"But we have a replay to look forward to," he added. "We know it will be tough. They will be at home, more comfortable in their own stadium."
At Wembley, Harry Kane broke the deadlock against AFC Wimbledon with just under half an hour to go before Kane again and Jan Vertonghen made it 3-0 to put the game beyond the reach of the visitors.
On Saturday, League Two Coventry City sent Premier League side Stoke City crashing out, prompting the sacking of Mark Hughes.