Two goals down from the first leg in Kiev, Balotelli left his team-mates to battle on for almost an hour without him after he was sent off for planting his studs into Goran Popov's chest and thigh.
Although they quickly made light of Balotelli's absence to pull a goal back through Aleksandar Kolarov, City eventually ran out of steam and ideas against a team content to soak up pressure.
It leaves Roberto Mancini's men to look ahead to maintain the fight for a Champions League spot, knowing their only realistic chance of silverware now lies in the FA Cup, where they will face Manchester United in a Wembley semi-final next month.
Having suffered an allergic reaction to the grass in Kiev, Balotelli was restored to the City starting line-up, with Mancini doubtless expecting a more meaningful contribution.
The controversial Italian should have achieved that aim after only three minutes.
David Silva has edged even Carlos Tevez as City's man-of-the-season so far this term and the brilliant Spaniard flicked a superb pass to Micah Richards, who quickly curled a low cross to the far post.
The only words of redemption were that Balotelli ended up with less time than it initially appeared he would have as Dynamo defenders closed in.
Still, inside the six-yard box, the 20-year-old should have found the net instead of lifting a woefully disappointing effort over the bar.
What a difference that would have made to the tie.
It allowed Kiev to settle into a rhythm of soaking up pressure, whilst attempting to hit their opponents on the break to grab an away goal that would kill the contest.
Balotelli nodded Kolarov's corner over from close range, then got in the way of a Silva piledriver that was off target anyway.
It was an eventful half hour for a player who seems to attract attention like paper clips to a magnet.
And it came to a suitably ridiculous conclusion with his red card.
Balotelli expressed surprise when Cuneyt Cakir dispatched him to the dressing room, and Mancini was not very impressed either.
However, after sticking his studs into Popov's chest, very much in the manner of City team-mate Nigel de Jong on Xabi Alonso in the World Cup final, then planting them on the defender's thigh for good measure, it was difficult to see what alternative the Turkish official had been left with.
It seemed like the end of any City hopes of progressing. Such is the quirky nature of this club they instantly halved the deficit.
Kolarov strode onto a short free-kick with relish and belted a low shot through a posse of defenders, catching goalkeeper Oleksandr Shovkovskyi totally by surprise as it flew through his dismal attempt to save.
After spending so long complaining of the tiredness being felt by his squad, Mancini was now faced with the prospect of urging his remaining 10 men for greater effort.
Richards powered a header over after climbing to reach Silva's free-kick, before the Spain star attempted to check back onto his left foot after an opening had been created that invited an effort with his right.
The more desperate City became, the easier Kiev found it to make chances amid a growing number of yellow cards.
Joleon Lescott headed a Denys Garmash effort off the line, not long after the Kiev man had replaced Andriy Shevchenko.
Twenty-four hours earlier, Mancini had claimed he did not have another player who could change a game like Adam Johnson.
He must have spent the intervening period mulling this over because not only did Mancini name the former Middlesbrough man on the bench after previously declaring it would be better to let his ankle injury recover fully during the international break, he brought him on with 20 minutes to go.
Edin Dzeko followed soon afterwards as Mancini shed his cautious image.
But with legs tiring badly, the urgency had disappeared from City's play.
Dzeko did create one last chance for himself in stoppage time but neither he, nor Yaya Toure with his even later free-kick could not prevent the Blues from bowing out.