An organised display looked set to pay off when a Sergio Ramos own-goal gave the hosts the advantage just after the break, but after Nani was shown a controversial red card for catching Alvaro Arbeloa, which left Ferguson seething at referee Cuneyt Cakir, Real turned on the power.
Luka Modric, a longstanding Ferguson target during his Tottenham days, came off the bench to bend in an equaliser before Cristiano Ronaldo — who else? — stabbed in the second.
United could complain about the call of the Turkish referee, and they certainly did, but they were fortunate Rafael did not concede a penalty, and presumably a red card, for handling on the line from a Gonzalo Higuain header.
Even after their admirable display in drawing 1-1 in the Bernabeu, it was always hard to argue United’s case as potential Champions League winners.
A sustained run in this competition would hardly have drawn comparisons with Chelsea’s negativity, but it would have been a triumph of organisation rather than an indication of a potential era of European dominance.
Ferguson undoubtedly has a top-quality squad, good enough to be 12 points clear at the top of the Premier League, but how many would Jose Mourinho seriously covet?
They came up short and they never had the feel of quality or destiny that Real, who again dominated possession at Old Trafford, exuded.
With Ferguson raising eyebrows by starting without Wayne Rooney, Robin van Persie’s continued barren run could not have come at a worse time.
It was a tight opening period of skirmishes, but for all the talk of Real’s ability on the break, United cancelled out that strength by simply sitting deep and waiting to counter themselves.
Danny Welbeck may not be the most prolific of strikers but he certainly troubled the Spaniards in the Bernabeu and, as well as shadowing Xabi Alonso, his pace in behind caused Real Madrid serious problems.
After Higuain missed a decent opening for the visitors, a cross from Ryan Giggs, who finally celebrated his 1000th professional appearance, to the far post picked out Tom Cleverley, whose effort was blocked by Ramos.
Nemanja Vidic then thumped a header off a post from a Giggs corner.
Ronaldo had been limited to a free-kick that he whacked straight into the wall and he tried his luck from 30 yards, only to be blocked by Vidic, and when he raced on to a Sami Khedira through ball, he was again denied by the Serbian.
Real goalkeeper Diego Lopez was then forced into a decent double save from Van Persie and Welbeck.
Ferguson stressed the need to maintain concentration at the interval and United were rewarded less than three minutes into the second period.
A frenetic spell of pressure saw the ball clawed away by Real only for Nani to rob Khedira and prod in a cross that glanced off Welbeck before being diverted in by the helpless Ramos.
Just as United looked to have taken a major step towards the last eight, they were reduced to 10 men.
After Nani caught Arbeloa in the chest, there was a lull as both teams waited for a yellow and a free-kick, only for the referee to show the Portuguese a straight red.
Ferguson launched himself forward from the dugout to rage at the decision and then urged all four sides of Old Trafford to get behind his team.
But, like a van Persie shot from distance that was held by Lopez, it was only a temporary respite and midway through the second period, with Real camped on the edge of the United box, Ronaldo fed Modric and the Croatian worked the space to bend a shot in off the post.
Three minutes later Higuain drove a firm cross to the far post for Ronaldo to touch in from a couple of yards out and although he again refused to celebrate, he still broke United hearts for the second time in four years and knew he had taken Real a major step towards the last eight.
Even with Rooney being thrown on, United simply could not get out of their own half and De Gea did well to hold another Modric strike.
Michael Carrick had a header saved and Rooney also lifted a shot over and Kaka even saw a late effort come back off the post.
Ronaldo spurned a couple of opportunities on the break and Lopez also pulled off a fine save from a Vidic header.
At the final whistle Ferguson was left to jab his finger angrily at the referee but, at 71, he must be wondering how likely he is to ever taste European Cup success again.
Subs for Manchester United: Rooney for Cleverley 73, Young for Welbeck 80, Valencia for Rafael 88.
Subs for Real Madrid: Kaka for Di Maria 45, Modric for Arbeloa 59.