After surviving some early Rangers pressure Celtic took the lead just before half-time with a wonderful volley from Thomas Gravesen.
The visitors should have had a penalty shortly after this goal when Steven Smith brought down Neil Lennon.
The second half was almost non-stop attacking by Rangers who struck the woodwork twice.
Just when it seemed that there was no way through, thanks to some superb goal-keeping by Artur Boruc, Rangers equalised from Brahim Hemdani's volley two minutes from time.
Barry Ferguson should have put Rangers ahead after 18 minutes but volleyed over from six yards from a suspiciously offside position.
Boruc then produced a marvellous fingertip save to deny Nacho Novo after Lennon had given away possession.
Celtic went ahead when Lee Naylor's cross was flapped at by Allan McGregor and Gravesen composed himself at the far post before cracking home a volley from a tight angle.
There looked to be a clear cut penalty for Celtic when Lennon was brought down by Smith's tackle, but referee Kenny Clark waved away their appeals.
At the start of the second half McGregor did well to block with his legs an Aiden McGeady volley, before Rangers laid siege to the Bhoys goal.
From Charlie Adam's clever cross Dado Prso volleyed against the bar and Libor Sionko hit the rebound against the other post.
From Prso's flick Novo pulled his shot inches wide, though he did appear to be fouled as he shot.
Steven McManus then headed clear a dangerous Smith cross after a flowing Rangers mov,e before Boruc flung himself to his left to keep out Karl Svensson's volley.
Rangers equalised when Ferguson's corner was only clear as far as Hemdani, who volleyed home with the aid of a deflection off Gravesen.
The home side could have won the match in the last minute when Prso's pass sent substitute Filip Sebo through, but Boruc blocked his effort.