The prolific strikeforce of Sergio Aguero and Alvaro Negredo were again on target while Fernandinho struck twice and David Silva and Yaya Toure also got on the scoresheet.
Theo Walcott marked his first start since September with two fine goals to keep Arsenal in contention but Per Mertesacker's late header was mere consolation for a side ultimately well beaten.
City closed to within three points of the Gunners following the thumping win which took their home tally to 35 goals in eight games this season.
"I think at home we have proven that we are an incredibly tough team to beat and we can score goals of course," said captain Kompany. "It was a great game for the fans and it was just end-to-end and at times the tempo was frightening.
"The biggest message, though, is if we win the next game which is Fulham away. Those are the games that are very difficult for us. In home games we can challenge anyone."
Arsenal boss Arsene Wenger felt his team were mentally drained after their games against Everton last weekend and Napoli on Wednesday, but stressed that did not justify the nature of their defeat.
"The concentration level we had given on Sunday and Wednesday night we had not completely recovered," he said. "It hurts to lose like that, but we made too many mistakes today in the middle of the park. I feel as well that three wrong offside decisions today from the referee did not go very well for us.
"Overall, they deserved the win. We made too many technical mistakes today. It's for sure that our schedule is not ideal. Is that the only explanation? I'm not sure."
Mesut Ozil walked straight off the pitch at the end without applauding the visiting fans, prompting a spat with team-mate Per Mertesacker, but Wenger refused to be drawn on the clash between the German duo.
"We want to win and we are sad because we lost a big game," he said.
Not in the least bit intimidated by Arsenal's superb form this season, City opened the scoring after 14 minutes when Martin Demichelis flicked on a corner and Aguero once again showed perfect balance to hook in a volley at the back post.
The visitors then pulled level on 32 minutes after Aaron Ramsey robbed Toure and sent Ozil clear, the German pulling the ball back and Walcott coolly slotting in from the edge of the area. Negredo then restored City's lead on 39 minutes as he tucked home a Pablo Zabaleta cross from close range after the right-back had been picked out by a Toure crossfield pass.
And Fernandinho doubled the gap when he took full advantage of an Ozil mistake to curl in from the edge of the area for his first goal since his £30 million summer move from Shakhtar Donetsk. Arsenal were far from beaten and Walcott threw them a lifeline with a sublime goal just after the hour mark.
But City hit back in the way they know best as Jesus Navas weaved his way through the defence on the right and pulled the ball back for Silva to sidefoot home from eight yards.
Samir Nasri then put another opportunity over before laying off for Fernandinho to cleverly dink in a fifth goal in the closing moments.
Nicklas Bendtner thought he had headed in a late consolation only to be flagged offside, but Costel Pantilimon, who earlier saved well from Wilshere, was beaten in injury-time by a Per Mertesacker header. Toure had the final word from the penalty spot after substitute James Milner was tripped by Wojciech Szczesny.