The Gunners had been looking for a response to Saturday's lacklustre 1-0 loss at Norwich, but failed to produce one as manager Arsene Wenger watched on from the stands, serving out his European touchline ban.
Schalke now overtake Arsenal at the top of Group B, and were good value for their victory, secured by second-half goals from Klaas-Jan Huntelaar and Ibrahim Afellay.
Source: PA
Source: PA