Match ends, Manchester City 3, Everton 1.
Manchester City ended Everton's unbeaten Premier League start with a stylish attacking victory that was the ideal response to the Champions League humbling against Bayern Munich.
Everton led a gripping match when Romelu Lukaku slipped the ball past under-pressure City keeper Joe Hart.
But Alvaro Negredo equalised with a cool finish from Yaya Toure's pass.
Sergio Aguero's low strike made it 2-1 and his penalty, which went in off Tim Howard's head, sealed the win.
The spot-kick, awarded after Seamus Coleman tangled with Pablo Zabaleta but hotly disputed by the visitors, was credited as an own goal to the unfortunate Howard as the ball hit the diving goalkeeper and crossed the line after initially striking the post.
It helped ensure City's fourth consecutive home league win, and the victory was a much-needed boost after the painful 3-1 defeat by Bayern on Wednesday and last week's shock league loss to Aston Villa.
But, as impressive as they were in attack, the defensive display in a thrillingly open first half will once again be questioned.
Vincent Kompany was the only player to keep his place in the starting back four from Wednesday and they lost their inspirational captain to what looked like a leg muscle injury after 33 minutes.
Everton had already looked a threat before then with the ever-impressive Ross Barkley, Steven Naismith and James McCarthy having the better of the midfield battle.
But it was the pace, power and direct running of Lukaku that was the focal point for their attacks.
England keeper Hart - so heavily criticised for his recent performances - did well to prevent Lukaku giving the visitors the lead with an early chance, but he was then beaten by the Belgian when the on-loan Chelsea striker nipped past Joleon Lescott and curled the ball home.
Hart got a strong touch but concerns over his attempt were soon forgotten as the home side levelled within 60 seconds.
Toure played a delightful pass behind Coleman, and Negredo slipped the ball home via a big deflection off the scrambling Howard.
Gareth Barry's absence had deprived Everton of their defensive shield and City began to exploit it ruthlessly.
A superb quick free-kick involving Toure and a beautiful first-time pass from David Silva should have seen City go ahead soon after, but Aguero placed his effort narrowly wide of the far post.
Argentine striker Aguero then made a mess of a great opportunity to get through one-on-one with Howard when he hopelessly miscontrolled a simple pass.
However, after the hugely impressive Lukaku had a strong shout for a penalty ignored, Aguero made amends by giving City the lead with seconds of the first half remaining.
The excellent Silva, making his first league start since August, slid a perfectly weighted pass down the right-hand side of the box and Aguero struck a first-time shot across Howard and into the net.
Everton were unlucky to be trailing at the interval but that goal changed the complexion of the match and City's defensive display improved considerably.
The visitors would have gone up to second in the table with a win but barely threatened and it was the hosts who posed the far greater threat.
Howard's own goal from Aguero's low penalty gave them breathing space and they could have added to their margin of victory had the American goalkeeper not made fine saves from Negredo and Samir Nasri during a relatively incident-free second period.
Manchester City manager Manuel Pellegrini
"I am very pleased by the character the team showed today. We really needed this victory because at the start of the game we were five points behind Arsenal and it is important to continue wining here at home.
"Equalising immediately was important but more important was the character, playing against Everton - the only unbeaten team in the league.
"After a defeat on Wednesday it was important for me to see how the players reacted after that defeat.
"We had at least four or five clear chances to score and I don't remember Everton having too many chances to score, so I don't think the difference between the two teams was the penalty."
Everton manager Roberto Martinez
"We made it a really open game and to score the first goal was important. Then you have to be very superior when the calls are not going for you. Unfortunately, on the day, we didn't have that luck that we needed.
"I thought the penalty awarded is a football disaster. Jon Moss [referee] needs to watch it again and see why he gave it. Contact doesn't mean a penalty. If you are going to give a penalty for that it is going to make the game very difficult.
"Romelu's is more of a penalty."
- 5ZabaletaBooked at 78mins
- 13KolarovSubstituted forClichyat 58'minutes
- 25FernandinhoBooked at 89mins
- 4KompanyBooked at 23minsSubstituted forNastasicat 34'minutes
- 7MilnerBooked at 45mins
- 42Y Touré
- 16AgüeroSubstituted forNasriat 79'minutes
- 21SilvaBooked at 74mins
- 24HowardBooked at 70mins
- 23ColemanBooked at 80mins
- 21OsmanSubstituted forGibsonat 63'minutes
- 15DistinBooked at 69mins
- 11MirallasSubstituted forDeulofeuat 63'minutes
- 17LukakuSubstituted forKonéat 82'minutes
- 14NaismithBooked at 87mins
- Jonathan Moss
- Shots on Target
Second Half ends, Manchester City 3, Everton 1.
Attempt saved. Samir Nasri (Manchester City) right footed shot from the left side of the six yard box is saved in the bottom left corner. Assisted by Yaya Touré.
Fernandinho (Manchester City) wins a free kick in the attacking half.
Foul by James McCarthy (Everton).
Attempt saved. Arouna Koné (Everton) right footed shot from outside the box is saved in the centre of the goal. Assisted by James McCarthy.
Fernandinho (Manchester City) is shown the yellow card for a bad foul.
Foul by Fernandinho (Manchester City).
Seamus Coleman (Everton) wins a free kick in the attacking half.
Steven Naismith (Everton) is shown the yellow card for a bad foul.
Yaya Touré (Manchester City) wins a free kick in the defensive half.
Foul by Steven Naismith (Everton).
Substitution, Everton. Arouna Koné replaces Romelu Lukaku.
Offside, Manchester City. James Milner tries a through ball, but Álvaro Negredo is caught offside.
Attempt saved. Álvaro Negredo (Manchester City) left footed shot from the left side of the box is saved in the bottom left corner. Assisted by Samir Nasri.
Seamus Coleman (Everton) is shown the yellow card for a bad foul.
David Silva (Manchester City) wins a free kick on the left wing.
Foul by Seamus Coleman (Everton).
Substitution, Manchester City. Samir Nasri replaces Sergio Agüero.
Attempt saved. Sylvain Distin (Everton) header from the centre of the box is saved in the bottom left corner. Assisted by James McCarthy with a headed pass.