A ruthless performance from the Seagulls dominated the Gunners almost from the first whistle, as Julio Enciso, Deniz Undav and Pervis Estupinan all scored in the second half.
With relentless Manchester City winning at Everton in the earlier kickoff to move four points clear, Arsenal knew only a victory would suffice to keep them in the hunt.
But they produced a laboured display against the crafty south coast club, meaning City can now win the title against Chelsea next Sunday.
Arsenal's former Brighton forward Leandro Trossard struck the crossbar in the first half, but Arsenal looked deflated after Enciso struck in the 51st minute and crestfallen when Undav lobbed over Aaron Ramsdale in the 86th minute.
Estupinan completed Arsenal's misery in stoppage time.
A fifth league defeat of the season left Arsenal on 81 points with two games remaining to City's 85 with three left and victory for Pep Guardiola's side next weekend against Chelsea would wrap up City's fifth title in six seasons.
Brighton have 58 points with four games still remaining.
Additional reporting by Reuters.