A full-strength Southampton scored the only goal of the game in the 24th minute when a Kyle Walker-Pieters cross took a slight deflection off Gabriel Magalhaes.
Despite an improved display in the second half, Arsenal could not turn things around and the holders fell to an embarrassing exit.
On that note, here are five talking points from the game.
#5 Arsenal’s need for a backup left-back comes to the fore
Kieran Tierney’s importance to this side has become increasingly evident over the past few weeks.
Whenever he has not been present, Arsenal have struggled for creativity. His bursting runs down the left and whipped crosses cannot be seemingly replicated by anyone else in the Arsenal squad.
Ainsley Maitland-Niles was deemed a worthy backup, but his performance against Crystal Palace cast doubts in manager Mikel Arteta’s mind.
Against Southampton, Cedric was played as a left-back but endured a disappointing outing. His crosses were wayward and his inability to deliver them off his weaker foot severely hampered Arsenal’s build-up play.
With Maty Ryan secured and Martin Odegaard on his way, Arsenal could be in the market for another left-back too.
#4 Eddie Nketiah doesn’t take his chance
It seems as though England’s U21 all-time top scorer - Eddie Nketiah - is at a crossroads in his Arsenal career.
With his contract expiring next summer, Nketiah’s situation isn’t helped because a certain Folarin Balogun is banging on the door for the former's spot.
Against Southampton, the 21-year-old was handed a rare start as the focal point of the Arsenal attack. However, despite his work rate, he struggled in the final third.
Across the 90 minutes, Nketiah attempted three shots, created one chance and found himself offside on three occasions.