Forest's owner Evangelos Marinakis' faith in manager Steve Cooper was restored as an impressive end of season run saw them clinch Premier League safety with one game to spare.
In stark contrast, Arsenal let the Premier League title slip away from them with just two wins in their last eight Premier League games.
Taiwo Awoniyi’s first-half goal for Forest sent the home crowd into raptures as they held firm to claim a historic win over Arsenal who finished the season with a whimper.
Arsenal, who were excellent throughout the campaign led the Premier League charge and were on top for 248 days of the season - but a dismal run in handed Manchester City and Pep Guardiola the Premier League title for a 3rd consecutive season.
For Forest, this was a real red letter day as they secured their survival against the odds.
For large parts of the season, which began with more than 20 new signings, they looked destined to return straight back to the Championship, not least when they were on an 11-game winless run going into the end of April.
But Awoniyi’s hot streak, with five goals in three games, helped Cooper’s side lift themselves out of the bottom three and they can no longer be caught by Southampton, Leicester or Everton.
Everton’s draw at Wolves earlier in the day meant Forest came into the game with confidence knowing a win would guarantee their safety.
And backed by a vociferous home crowd, desperate to see their side secure survival at the place where they have won so many of their points this season, they made a strong start as Arsenal’s defence survived some early pressure.
The Gunners began to assert some level of control and Gabriel Jesus was denied by Forest goalkeeper Keylor Navas, who came out quickly to smother the ball, while the Brazilian nodded over at the far post.
But the City Ground exploded in the 19th minute as Forest punished their visitors with a lightning counter-attack.
Martin Odegaard loosely passed straight to Morgan Gibbs-White who surged forward at pace before feeding Awoniyi, who enjoyed a bit of fortune as Gabriel’s challenge bobbled against his leg and he scuffed past Aaron Ramsdale.
Arsenal had plenty of possession but lacked the creativity and guile to break Forest down in the first half, with Leandro Trossard and Jesus sending efforts tamely off target.
Forest vitally ensured they took their lead into the interval and could have doubled it soon after the restart.
After recycling a free-kick, Renan Lodi’s ball back in found Felipe and his shot from close range was blocked.It was more of the same for the Gunners, who had plenty of the ball but did little with it.
Bukayo Saka did have a moment of promise when he was played in but he fired straight at Navas.
Instead it was Forest who were pushing for a second and Gibbs-White squandered a good chance when he found the side-netting after taking advantage of Ben White’s slip, before Lodi drilled wide.
As the game entered the final 15 minutes with the holy grail of survival in touching distance, Forest began to sit deep and invite pressure on themselves.
It is unsurprising that nerves were so fraught as no side have conceded more goals in the final 15 minutes of matches than Forest’s 17 and every tackle, block and clearance was greeted with cheers as loud as a goal.
Gibbs-White fired straight at Ramsdale as Forest looked to make it a less tense ending for them, but Arsenal’s poor attacking display meant they were able to hold on to spark mass scenes of celebration.