Victory - which an uncharacteristically humble Real manager Jose Mourinho said was undeserved - was gained against a United side reduced to 10 men with over half-an-hour to go when Nani was given a straight red card for a high tackle on Alvaro Arbeloa.
Defeat leaves the distinct likelihood of there not being a British club in the last eight for the first time since 1996 as both Arsenal and Celtic face overhauling 3-1 and 3-0 deficits respectively on trips to Bayern Munich and Juventus.
The night's other match was a much more clear-cut affair as German champions Borussia Dortmund eased to a 3-0 win over Ukrainian opponents Shakhtar Donetsk to book a last eight spot for the first time in 15 years when, as holders, they reached the semi-finals and were beaten by Real.
Real grabbed their two goals after going behind to a Sergio Ramos own goal and Nani's sending off as Luka Modric scored with a beautiful effort and then Ronaldo nipped in to add the second.
It all left Mourinho, who has already taken Porto and Inter Milan to Champions League glory, underwhelmed by his side's performance.
"The best team lost, independent of the sending off," Mourinho told ITV. "We didn't deserve to win and didn't play well."
United boss Alex Ferguson was replaced at the post-match press conference by his more temperate assistant Mike Phelan, who described the Scot as being "very distraught".
"It was a great performance marred by the wrong decision," added Phelan.
United had broken the deadlock early in the second-half as Nani's low cross was met by Danny Welbeck and his shot deflected off Real skipper Ramos and into the net.
However, Nani's contribution was to be brought to an abrupt and dramatic end when Turkish referee Cuneyt Cakir - who sent off Chelsea skipper John Terry in last season's semi-final against Barcelona - showed a straight red card at the Portuguese winger after he went in with his studs showing on Alvaro Arbeloa.
It prompted furious protests from the players and Ferguson, who shoved one member of his staff aside to descend the steps and remonstrate with the fourth official.
Mourinho removed Arbeloa almost instantly and sent on the attacking talent of Modric to try to force home the one-man advantage and it paid off within minutes.
The Croatian unleashed a superb curling effort from well outside the area that beat the diving David de Gea and three minutes later the whole game was turned around as Gonzalo Higuain slid a delightful low cross to the far post and Ronaldo was on hand to tap it into the net.
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