The English champions didn’t wait to intimidate the hosts, as Ralf Fahrmann tipped an overhead kick from Sergio Aguero for a corner following a cleverly worked free-kick.
Trying to play from the back backfired for Schalke, as David Silva stole possession to tee-up Aguero for the opener on 19 minutes.
It soon became honours even when Schalke were awarded a penalty Nicolas Otamendi handled in the box according to the Video Assistant Referee (VAR). Nabil Bentaleb struck from the penalty spot on 38 minutes.
The Algerian - who is a former Tottenham Hotpur player - sent another penalty past Ederson after Fernandinho brought down Salif Sane to end the half on the double.
In the final minute of time added on, Bernardo Silva nearly came up with the perfect response through a first-time volley that shaved the crossbar.
Seven minutes after the hour mark, Otamendi didn’t make matters any easier for Pep Guardiola as he saw red for picking up his second yellow card of the game.
As Schalke looked to wrap up the victory, their former star Leroy Sane levelled matters with an impeccable free-kick from around 25-yards out.
Raheem Sterling completed the come back in the final minute of regulation time when he held off his marker to finish from a tight angle after latching onto Ederson's long-ball.