Gareth Taylor's diving header earned Forest a point in the dying moments in Joe Kinnear's first game as manager.
Kinnear had a dream start, Andy Impey netting three minutes in from Marlon King's cross, but Jorge Leitao quickly slid home an equaliser for Walsall.
It got better for the visitors when Jamie Lawrence tapped in a rebound and Gary Wales curled home a superb third.
But Forest pulled one back through King's downward header and Taylor's dramatic late finish secured a draw.
Kinnear had brought Impey and Alan Rogers - both on loan from Leicester - into the side.
And Impey bagged a debut goal when he latched onto King's left-wing cross to slip the ball past Jimmy Walker.
But the City Ground crowd were stunned into silence when Leitao slammed home Wales' cross in off Darren Ward's legs.
Forest were shell-shocked, and Walsall soon extended their lead when Ward fumbled Gary Birch's shot and Lawrence converted the rebound.
Wales made it 3-1 before the break when he turned inside John Thompson and struck a delightful shot past a despairing Ward.
Kinnear sent Forest out after the break in determined fashion and the hosts laid seige to Walsall's goal for nearly the entire half.
They levelled when Andy Reid's inviting left-wing cross was firmly nodded in by King for his first goal from open play for the club.
The Reds had several chances to level but failed to take them, until Taylor - on for the disappointing Michael Chopra - headed in Rogers' centre at full-stretch.
Another substitute, Eoin Jess, should have won Forest all three points a minute later but he amazingly headed over in front of an open goal from Reid's cross.
Nottm Forest: Ward, Louis-Jean, Walker, Thompson, Rogers,
Impey, Reid, Sonner, Williams, King, Chopra. Subs: Taylor,
Roche, Jess, Gunnarsson, Robertson.
Walsall: Walker, Bazeley, Aranalde, Carbon, Roper, Emblen,
Samways, Osborn, Wales, Birch, Leitao. Subs: Petterson, Matias,
Lawrence, Wright, Kris Taylor.
Referee: G Hegley (Hertfordshire).