Exactly 15 years today since Gunners favourite Thierry Henry signed from Juventus. Arsenal the host of the Emirate cup saw their firm hands on the trophy removed by a single goal from Colombian striker Falcao who started his first game since a serious knee injury in January.
This is now the second time in a row the Gunners are missing out of the trophy having been beaten by Didier Drogba's Galatasary last season.
Arsene Wenger named Sachez in his starting line-up.
But, having won 5-1 against Benfica 24 hours earlier, Arsenal struggled against the Ligue 1 outfit and created little in the way of clear-cut chances with Sanchez rarely on the ball.
With Saturday's four-goal hero Yaya Sanogo and fellow goalscorer Joel Campbell rested from the squad, Wenger's side struggled to play at the same high tempo that had seen them blow Benfica away.
Falcao, starting a game for the first start since a serious knee injury in January, opened the scoring as he converted a free header from the edge of the six-yard box eight minutes before the break.
Sanchez was on the periphery for the opening 45 minutes and was moved into a central role when Olivier Giroud was replaced at the break by midfielder Alex Oxlade-Chamberlain.
Fellow new signings Mathieu Debuchy and Calum Chambers started in the Arsenal defence, with the latter replaced by Ignasi Miquel at half-time.
Former Barcelona man Sanchez was more involved immediately following his change in role as he fed Santi Cazorla inside the Monaco penalty area, with the Spaniard poking the ball through to Jack Wilshere - whose powerful effort was superbly turned away by Subasic.
Sanchez could only slash a shot wide after Nabil Dirar had dallied in possession inside his own box - the Chile international's last contribution before he was replaced with a little over 15 minutes remaining.
Akpom came on in his place and was brought down by Subasic as he burst into the box, only for referee Atkinson to award a free-kick rather than a penalty - despite replays showing the foul was clearly inside the area.