It was harsh in the extreme on a vibrant and free-flowing Borussia Dortmund side who outplayed their opponents for long periods only to come up against a goalkeeper in inspired form and a referee that City should be thanking for giving them a break they never deserved.
Time and again Joe Hart came to City's rescue with an outstanding display of goalkeeping that spared the Premier League champions from a hiding and kept them in an absorbing game that Dortmund should have put to bed long before Balotelli took centre stage. Leading through Marco Reus's second-half strike, which followed a bad mistake by the substitute Jack Rodwell, Dortmund were in total control and it seemed a matter of time before they added a second goal.
Hart, in keeping with everything that had gone before, denied Reus and Ilkay Gündogan with fine saves but the golden opportunity for Dortmund to increase their advantage and kill off City fell to Robert Lewandowski in the 76th minute. Gündogan nutmegged Gaël Clichy on the touchline before delivering a wonderful cross that exposed City's fragile defence yet again and implored Lewandowski to convert only for the Poland forward to inexplicably steer the ball wide with the outside of his boot.
It was a huge slice of good fortune for City and another followed when Pavel Kralovec, the Czech referee, pointed to the spot and adjudged that Neven Subotic had handled Sergio Agüero's shot. It seemed more a case of ball to hand rather than hand to ball, with Subotic hard pushed to get out of the way of Agüero's hooked effort on the corner of the six-yard box, but Kralovec deemed otherwise and Balotelli, an 81st-minute substitute, did the rest, nonchalantly rolling the ball into the corner of the net.
Although Dortmund complained bitterly at the award of the penalty, they still found the energy to summon one more attack that could easily have led to a winner. Lewandowski once again pulled the trigger and this time the striker found his range, but Hart, for the umpteenth time, produced a flying save to preserve the point that keeps City's faint hopes alive of reaching the knockout stages.
They will, however, have to play with much more conviction than they showed here if they are to have any chance of finishing ahead of Dortmund or Real Madrid in Group D. Although City had their opportunities, most notably through Agüero, who could have had a first-half hat-trick but was frustrated by another excellent goalkeeping display, from Dortmund's Roman Weidenfeller, the hosts were vulnerable whenever Dortmund attacked and it was alarming to see the German side cut through their rearguard with such ease.
Yaya Touré and Rodwell, who replaced Javi García, offered little midfield protection while further back Matija Nastasic, once again preferred to Joleon Lescott in central defence, and Vincent Kompany never instilled confidence. City have now conceded 16 goals in nine games this season and, in truth, they never looked like keeping a first clean sheet of the campaign here. With Lewandowski a handful up front and Dortmund's attacking midfield trio of Reus, Mario Götze and Jakub Blaszczykowski willing runners, the German champions had a field day.
City's best moments were in the opening half, when David Silva started brightly, creating an early chance for Agüero only for Weidenfeller to block with his legs. The same two City players combined later in the first half but Weidenfeller thwarted Agüero in similar fashion and he made it a hat-trick of saves when he stretched every sinew to tip the striker's dipping 20-yard effort over the bar in the 35th minute. By that point Rodwell was on for García, who departed with a thigh strain, and Dortmund had long signalled their intent with a number of slick counter attacks.
Götze was experiencing a similar night to Agüero in front of goal. The Germany international saw an 11th-minute shot tipped on to the upright by Hart, had another effort blocked by the City keeper later in the half and, seconds later, saw a stinging shot brilliantly flicked on to the crossbar by a player performing at the top of his game. There was still time for one more Dortmund attack before the half-time whistle and it should have ended in a goal but Gündogan's close-range shot from Lewandowski's centre ended with Hart getting his body in the way.
Although Hart turned another Götze chance behind early in the second half, after Blaszczykowski and Lukasz Piszczek had neatly combined on the right, there was nothing he could do when Reus intercepted the blind pass Rodwell attempted to play to Nastasic and drove into the area before shooting across the City keeper.
It should have been game over for City later on but Lewandowki's profligacy left the door ajar for Mancini's players and Balotelli took full advantage to leave the Dortmund players crestfallen at the end.