United's hopes of securing the win that would have guaranteed safe passage into the next stage was undermined by a shocking first-half show.
Manchester United staged another dramatic late show to stun Panathinaikos and earn a precious Champions League point in Athens.
Paul Scholes struck an equaliser deep into injury-time to give Sir Alex Ferguson's side a draw that their desperately poor performance barely deserved.
United still need a result in their final game against Sturm Graz at Old Trafford to rubber-stamp a place in the last eight.
Panathinaikos bore little resemblance to the team that has been firmly anchored at the bottom of Group A and thoroughly deserved to win.
Teenager Yourkas Seitaridis struck a spectacular first half goal - and only an outstanding display from goalkeeper Fabien Barthez kept United's hopes alive until Scholes drove home the equaliser
United's hopes of securing the win that would have guaranteed safe passage into the next stage was undermined by a shocking first-half show.
Dwight Yorke and Andy Cole were re-united in attack but were forced to live off a starvation diet of the occasional long ball and rare raid in the opening 45 minutes.
Panathinaikos, in contrast, swept forward impressively and posed a constant threat to Barthez.
The home side deservedly took the lead after 24 minutes with a stunning strike from Seitaridis.
He took control 25 yards out before sending an unstoppable low drive past Barthez as he dived to his right.
United's response was muted, although Cole did have the ball in the net from Yorke's pass only to see it correctly ruled out for offside.
Panathinaikos wasted the perfect opportunity to double their advantage two minutes before half time.
Gifted Ghanaian teenager Derek Boateng sent Liberopolous clear with only Barthez to beat, but he chose to pass to Goran Vlaovic in an offside position and the chance was missed.
United's players would not have relished their half-time talk from Ferguson, and came out after the break with a renewed sense of purpose.
Scholes, who had shot narrowly off target in the first half, had another opening after 56 minutes but shot straight at Panathinaikos keeper Antonis Nikopolidis.
Ferguson attempted to inject fresh impetus into United's attacking efforts by replacing defender Mikael Silvestre with Luke Chadwick.
But it was still Panathinaikos in the ascendancy, and twice Barthez had to demonstrate his brilliance to keep United in the game.
He dived to his right to palm away a power drive from Giorgis Karagounis after 64 minutes - and did even better five minutes later as the Greeks threatened to increase their lead.
Substitute Christoph Warzycha released Boateng, but the 17-year-old was denied by an outstanding stop from Barthez low to his right.
Ferguson made further changes with 12 minutes left, replacing Phil Neville and Cole with Teddy Sheringham and Ole Gunnar Solskjaer.
Barthez was United's saviour again when he performed heroics to thwart Angelos Basinas as Panthinaikos poured forward again.
United wasted their best chance of the evening as time ticked away when substitute Sheringham headed straight at Nikopolidis after stealing in unmarked on Gary Neville's cross.
But they were not to be denied, and the stadium fell silent as Scholes hammered home the equaliser to salvage an unlikely point for United.
Panathinaikos: Nikopolidis, Fissas, Henriksen, Goumas, Seitaridis, Olivares, Karagounis, Boateng, Vlaovic, Basinas, Liberopoulos. Subs: Chalkias, Galetto, Warzycha, Pflipsen, Sigurdsson, Nasiopoulos, Koutelieris.
Man Utd: Barthez, Silvestre, Stam, Brown, Gary Neville, Phil Neville, Scholes, Keane, Beckham, Yorke, Cole. Subs: Rachubka, Irwin, May, Sheringham, Solskjaer, Greening, Chadwick.
Referee: K Nilsson (Sweden)