First-half goals from Theo Walcott and Olivier Giroud seemed to be meting out immediate justice for Arsenal's 2-0 defeat by the Germans in London a fortnight ago.
Schalke however, devoured their lead with Dutchman Huntelaar cutting the deficit in first half stoppage time and Peruvian Farfan completing their comeback with a deflected shot midway through the second half.
The result leaves the group wide open with Schalke in the lead on eight points and Arsenal a point behind in second place. Olympiakos beat Montpellier 3-1 to increase their tally to six points.
"I have to give my team a compliment for recovering from a two goal deficit," Schalke coach Huub Stevens told reporters. "We reacted brilliantly. Thankfully we scored just before half time. That was psychologically a big advantage for us."
For Arsenal coach Arsene Wenger, his team showed the response he wanted after a string of bad results have left them seventh in the Premier League following Saturday's defeat by Manchester United.
"At 2-0 you have not won the game and with the physical quality of the German team it is not over," Wenger told reporters. "They have a lot of quality and they never give up so overall I never felt that the game was over even at 2-0."
"After all the stick we got after Saturday's game it was important to show a good response. We played against a good team and it was a bit unfortunate that we concede a goal just before half-time."
WALCOTT FIT
Arsenal had Jack Wilshere back in the team as he continued his return from a long lay-off as well as Walcott, who was doubtful after missing training this week due to illness.
Schalke, who beat Arsenal 2-0 to snap their 45-game unbeaten run at home to foreign visitors stretching back to 2003, had them on the backfoot from the start with the Germans eager to win and advance with two games to spare.
Inquisitive shots from Christian Fuchs and Ibrahim Afellay forced keeper Vito Mannone to good saves as Schalke set the pace.
Arsenal, displaying an initial lack of confidence when they had possession, needed 18 minutes to find their way into the game and they did it with a bang.
Giroud took advantage of a Roman Neutstaedter back header to race clear but failed to beat keeper Unnerstall with Walcott slipping through to tap in from close range.
The 26-year-old Frenchman was on target in the 26th, drilling in a diving header from a Lukas Podolski cross.
Dutch striker Huntelaar, who had scored in all three previous group matches, fired Schalke back into the reckoning on the stroke of halftime but the forward, nicknamed 'the hunter', however, could not add another from point blank range after the restart.
Keeper Vito Mannone was kept busy but could do nothing when Farfan turned the game on its head, drilling in the equaliser in the 67th with Thomas Vermaelen deflecting it into the net.
Arsenal could have stolen three points with the final kick of the game but Walcott fired on keeper Lars Unnerstall from eight metres out.
