The hosts took the lead five minutes before halftime when City captain Steph Houghton redirected a shot by Ludmila Da Silva into her own net. Angela Sosa added a second Atletico goal in the 68th minute, knocking the ball in after the City goalkeeper Ellie Roebuck had made an initial save.
City grabbed a late consolation by substitute Pauline Bremer. Wednesday's other games featured lopsided wins for the heavy favorites. Defending champion Lyon routed Fortuna 7-0 to complete an 11-0 aggregate score.
Barcelona won 3-1 at Minsk to advance 8-1. Wolfsburg won 1-0 at Twente for a 7-0 combined victory, and Bayern Munch beat BIIK-Kazygurt 2-0 for a 7-0 aggregate win.
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