Brahim Hemdani kept Rangers' title challenge hanging by a thread with a superb late equaliser at Ibrox.
Hemdani celebrates with the Rangers bench after his late leveller
Thomas Gravesen gave Celtic the lead with a perfectly hit volley in the 38th minute to put the visitors in control.
Rangers continued to work hard, carving out a string of chances, but had to wait until two minutes from time for the leveller.
Hemdani fired a right-foot shot into the top corner of the net to finally pierce the Hoops' defensive resistance.
SPL Champions Celtic will doubtless feel aggrieved at being denied a first-half penalty when Steven Smith challenged Neil Lennon.
But the stalemate ensures that third-placed Rangers still trail behind leaders Celtic by 16 points, with Aberdeen in second spot.
Rangers went into the second Old Firm derby of the season knowing it was their last real chance of mounting a challenge for the championship.
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Manager Paul Le Guen rested several players for Thursday's 1-0 Uefa Cup win over Partizan Belgrade and he made no fewer than five changes.
Captain Barry Ferguson, Jeremy Clement, Dado Prso, Libor Sionko and Charlie Adam were named in the starting line-up in place of Gavin Rae, Makhtar N'Diaye, Filip Sebo, Thomas Buffel and Julien Rodriguez respectively.
The visitors were boosted by the return of Stephen McManus, who took the place of Darren O'Dea after recovering from a knee injury.
Kenny Miller had to settle for a place on the bench in favour of the more robust Gravesen, as boss Gordon Strachan made two changes from last week's win at Dunfermline.
The onus was very much on Rangers to take the game to their rivals, with Le Guen's men desperately needing full points.
Thomas Gravesen (right) gave Celtic the lead
But it was Shunsuke Nakamura who threatened first for Celtic when his close-range effort was comfortably held by Allan McGregor.
Hoops goalkeeper Arthur Boruc denied Nacho Novo, turning the Spaniard's shot just past the post.
Ferguson followed up with a positive run into the visitors' danger zone, only to blast over from six yards when it looked so much easier to find the back of the net.
Gordon Strachan's team struggled to find their usual passing rhythm, but they stuck to their task and got the breakthrough.
A swinging ball from Nakamura across the face of goal was missed by the entire Gers defence and fell to Gravesen's feet.
And the Dane showed good composure to drill a fierce volley into the roof of the net from the tightest of angles.
Celtic, now full of confidence, had a strong penalty claim when captain Lennon was impeded by Smith but their pleas were ignored by referee Kenny Clark.
After the break, Nakamura almost made it two when he flicked the ball wide after running onto a neat assist from Maciej Zurawski.
The bulk of the Ibrox crowd could only watch in frustration when, in the 61st minute, Prso volleyed against the right post before Sionko followed up and struck the left upright.
With Celtic defending in depth, Novo managed to get behind Naylor but he poked his shot a yard wide.
With time running out, the impressive Boruc denied the Light Blues with a string of saves from Karl Svensson, Sebo and Prso.
But French-Algerian Hemdani managed to keep his nerve, picking up a loose ball on the edge of the penalty area before arrowing a shot into the top left hand corner.
The goal proved to be just reward for Rangers' efforts.
Rangers: McGregor, Hutton, Hemdani, Svensson, Smith, Sionko (Sebo 71), Ferguson, Clement, Adam (Buffel 81), Prso, Novo. Subs Not Used: Klos, Papac, Rae, Rodriguez, Stanger.
Goal: Hemdani 88.
Celtic: Boruc, Wilson, Balde, McManus, Naylor, Nakamura (Miller 72), Gravesen, Lennon, McGeady, Jarosik (Pearson 72), Zurawski. Subs Not Used: Marshall, Telfer, Riordan, Sno, O'Dea.
Booked: McGeady, McManus.
Goal: Gravesen 38.
Ref: K Clark