The champions were trailing to David Meyler’s first-half goal on what was a largely frustrating afternoon for the home faithful.
But Milner stepped off the bench to dramatic effect, curling home a precision set-piece late on to prevent a first-ever league defeat to the Tigers.
City now trail leaders Chelsea - who won at Aston Villa - by seven points ahead of Wednesday’s trip to Stoke.
Boss Manuel Pellegrini made three changes to the side that drew with Chelsea, with Samir Nasri, Edin Dzeko and Pablo Zabaleta returning to the starting line-up.
Hull were the first to produce a shot on target, with Joe Hart down smartly to collect Sone Aluko’s angled effort after three minutes.
Nasri, returning after a three game spell out with a calf injury, was involved early, prompting and probing alongside fellow playmaker David Silva but City seemed out of sync.
The next half-chance fell to Dzeko after Gael Clichy’s cross, but the Bosnian’s looping header was collected by Allan McGregor in the Tigers goal.
More good work from Clichy set Aguero galloping down the left but after a heavy touch from the Argentinian the chance was gone.
City had a lucky escape after 16 minutes when Ahmed Elmohamady’s header crashed against the barl after Robbie Brady’s whipped cross. That was a stark warning and the hosts’ sloppiness cost them after 35 minutes when Hull took the lead after a comedy of defensive errors.
After Aguero lost possession in Hull’s half the Tigers broke quickly. Martin Demichelis’s half clearance fell to Jake Livermore, whose shot was parried by Joe Hart.
Gaston Ramirez evaded the challenges of Fernandinho and Zabaleta to force an effort onto the post, which rebounded for David Meyler to finish past a bemused-looking Hart.
City were rocked by the goal and after another set-piece was cleared unconvincingly, Aluko smashed the loose ball over.
There was a glimmer of hope just before the break when neat interplay from Silva and Fernandinho created a chance for Nasri, but Alex Bruce read the play and blocked the shot.
Jesus Navas replaced Fernando at the break for City and the jet-heeled Spaniard added tempo immediately.
City upped the pressure and only an acrobatic stop from McGregor prevented Dzeko’s volley from finding the net after Zabaleta had crossed in.
Tension mounted as City had a strong penalty appeal waved away by referee Jon Moss when Silva went down under Bruce’s challenge. Fuelled by a sense of frustration City piled forward but lacked their usual fluency and struggled to create clear chances.
Pellegrini threw Milner on for Dzeko before McGregor saved Nasri’s dipping free-kick. The Tigers keeper was called into action again shortly after but Aguero’s mis-hit snapshot carried little threat.
Pellegrini made his last change with Stevan Jovetic replacing Silva as City pressed for the elusive equaliser.
It almost came when Nasri picked out Aguero at the back post, but after smart control the Argentinian saw his shot crash off the underside of the bar.
And it finally did when Milner fired from 20 yards after Tom Huddlestone had felled Aguero, though there wasn’t enough time to find a second goal and the salvaged point was all the champions had to show for a frustrating afternoon at the Etihad.
