United front man Marcus Rashford opened the scoring with a sublime solo strike at the Principality Stadium in Cardiff, Wales, before Milan star Suso equalised. Victor Lindelof's own goal put Milan back in front after an hour, but substitute Jesse Lingard pulled United back level with just under 20 minutes left.
Red Devils midfielder Paul Pogba was absent after manager Ole Gunnar Solskjaer told the club's official website (h/t Evening Standard's George Flood) on Friday that he'd had a recurrence of a back spasm.
United travelled to the Welsh capital knowing goals were needed for them to overtake Benfica at the top of the ICC standings.
Solskjaer's side had scored three goals and conceded once in their first two games, while the Eagles ended their competition also conceding once but with six goals scored.
Rashford offered an ideal platform to build from in that regard and opened the game up following a turgid first 15 minutes.
Nemanja Matic lobbed a pass over the Milan defence for Rashford to chase, and the Englishman took care of the rest. He picked up the ball on the left touchline and cut inside past two defenders before finishing inside Gianluigi Donnarumma's right post (U.S. only):
Rashford's goal also took him clear at the top of United's pre-season scorer list:
The signs of improvement have been strong for United throughout pre-season, in which they have remained unbeaten, but familiar problems were all too evident in the lead-up to Milan's equaliser.
Suso deserved credit for his curled strike around 20 yards from David De Gea's goal, but Samuel Luckhurst of the Manchester Evening News criticised Matic's role in conceding:
De Gea was called back into action on several occasions before the break, most notably denying an awkward, bouncing ball from curling in at his back post with Milan striker Krzysztof Piatek lurking.
Marco Giampaolo's side ended the first half in the ascendancy and continued to build on the momentum of their equaliser after the break.
The Rossoneri went ahead when Suso's free-kick was headed on by Samu Castillejo, although it was United centre-back Lindelof who made the last touch into his own net.
Lingard was one of five substitutes to come on for United in the 65th minute, and the academy product made an almost instant impact.
Anthony Martial cut past two Milan midfielders before playing Lingard through on the left side of the opposition box, and the Englishman fired low into Donnarumma's bottom-right corner.
Lingard's strike upheld an incredible record for United's academy graduates this pre-season:
Daniel James also tested Milan's back line and won a dangerous free-kick on the edge of the box in the final minute of normal time, but fellow substitute Fred fired over.
Hakan Calhanoglu, Giacomo Bonaventura, Andre Silva and Rade Krunic stepped up to convert for Milan in the shootout, while Jesse Lingard, Ashley Young, Mason Greenwood and Angel Gomes each scored from the spot to make it 4-4.
Daniel Maldini was fifth in the Milan penalty order and saw his effort saved by De Gea, whereas James made no mistake and sealed a narrow win for his new club in Cardiff.