Arsene Wenger's team were left shell-shocked as Geoffrey Kondogbia put the French club ahead with a deflected first half strike before former Tottenham forward Dimitar Berbatov marked his return to north London with the second goal after the interval.
Berbatov's cool finish was a hammer blow to the Arsenal fans who had jeered him for his past allegiance to their bitter rivals and there was worse to come.
It was an especially chastening evening for Wenger, who made his managerial reputation during a seven-year spell at Monaco and was renewing acquaintances with his old club in a competitive match for the first time.
"The third goal makes our task extremely difficult in the second leg. It looks like we lost our nerve and our rationality on the pitch," Wenger said.
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Leonardo Jardim's side produced a counter-attacking masterclass to leave Arsenal impotent in attack and incompetent in defence and the Monaco coach said: "Arsenal have some excellent individuals and we were able to nullify their threat.
"Nobody really thought this result was possible but we achieved it."
Alexis Sanchez has emerged as Arsenal's creative fulcrum in his debut season and the Chile winger almost found the key to unlocking the obdurate Monaco rearguard when he exchanged passes with Mesut Ozil before flicking his shot just over.