The hosts drew first blood on the 60th minute mark through Isco, but late goals from Gabriel Jesus and Kevin De Bruyne sealed a thrilling comeback for Pep Guardiola’s men.
Los Blancos’ captain Sergio Ramos was shown a red card for chopping down Jesus on the edge of the box as the City striker looked set to make it three.
Zidane was left fuming at Real Madrid‘s short lapse in concentration when they were in the ascendancy.
"We had a good game for 75 minutes," the 47-year-old told reporters after the game.
"We are annoyed by the defeat, but the tie lasts 180 minutes, now we have to take the positives.”
“There aren't many positive things in the result, but we had a good game apart from the last few minutes.”
"We were good for 70 minutes. Now we have to go there and win if we want to go through.”
"We needed 10 more minutes of concentration in a very difficult match and, in the end, we paid for it.”
Next up for Real Madrid is a match on Sunday against their bitterest rivals Barcelona, who sit just two points above them on top of the La Liga table.