The forward completed Madrid's comeback in the 69th minute to secure a 3-2 aggregate win after the Spanish champions took advantage of United being reduced to 10 men.
"(United) were very aggressive, they were very well organized tactically and the match was very difficult for us," Madrid manager Jose Mourinho said. "But I doubt that 11 against 11 we can win that match."
Madrid gifted United the opener at the start of the second half when Sergio Ramos deflected Nani's cross into his own net.
But the game swung back in the visitors' favour in the 56th minute when Nani was sent off for a studs-up challenge on Alvaro Arbeloa.
Madrid seized control of the last-16 match with two goals in three minutes, with Luka Modric netting a powerful equalizer off the post in the 66th before Ronaldo tapped in the winner.
A game that started with affection for the returning Ronaldo and a 1,000th appearance for United's Ryan Giggs ended in acrimony.
At the final whistle, Giggs was angrily pointing at referee Cuneyt Cakir as Rio Ferdinand sarcastically clapped in his face, and manager Alex Ferguson made his fury clear on the touchline.
It was a defeat that was hard to take for United - and there was sympathy from Mourinho.
"We didn't play well, we didn't deserve to win," Mourinho said. "Independent of that (the red card) the best team lost."
A man so often linked with one day replacing the 71-year-old Ferguson at Old Trafford endeared himself to the United crowd by walking off the pitch without celebrating.
The celebrations in the ground came before kick-off.
And the cheers for Giggs on his 1,000th professional game were even eclipsed by the roars for Ronaldo on his first appearance since leaving for Madrid in 2009 for a world record 80 million pounds (then $131 million).
They soon gave way to jeers for the returning hero, whose first-half contribution was limited.
Instead, after Ferguson had praised Madrid's counterattacking qualities before the match, it was United using their speed on the break to unsettle Madrid.
And the surprising decision to leave Wayne Rooney on the bench until the 73rd appeared to be vindicated as Danny Welbeck was at the heart of United's attacking threat.
But United struggled to find a way past Diego Lopez on a night when the Madrid goalkeeper made fine saves.
Another delivery from Giggs - this time a corner - led to Nemanja Vidic heading against the post and Welbeck's rebound was smothered by Lopez, who was in goal in place of the injured Iker Casillas.
Madrid did find the net in the 33rd through Gonzalo Higuain but it was disallowed due to Sergio Ramos' foul on Van Persie.
Having edged the first half without anything to show for it, United was 2-1 in front on aggregate within three minutes of the restart.
Raphael Varane gave the ball away on the byline and Nani seized possession before whipping in a cross that Ramos turned into his own goal after Welbeck's slight touch.
Fortune didn't appear to be favouring Madrid, but that was reversed inside 10 minutes when Nani saw red for his flying tackle into Arbeloa's chest as they both went for the ball.
As Nani remonstrated with the referee, a furious Ferguson charged down from his seat in the elevated dugout to the touchline.
The crowd was inflamed by the sending off, and Ferguson was gesturing to whip them up into a frenzy.
Instead, Madrid's spirits were raised, with Modric scoring seven minutes after replacing Arbeloa.
The Croatia midfielder cut to his right across the top of the penalty area and unleashed a 25-yard shot that eluded the left hand of diving goalkeeper David De Gea and went in off a post.
Modric helped to create the second, with Mesut Ozil then releasing Higuain, who sent a low cross across the penalty area. At the far post, Ronaldo was primed to slide in past Rafael and tap the ball into the net but there was no celebrating the goal that broke the hearts of his former club.
United's response was to replace Tom Cleverley with Rooney but the hosts were repeatedly thwarted by Lopez.
While United's hopes of contesting the Wembley Stadium final were over, England was in danger of having no teams in the quarterfinals for the first time since 1996. Arsenal trailed Bayern Munich 3-1 going into the second leg in Germany next week. Defending champion Chelsea and Manchester City were eliminated in the group stage.
In Tuesday's other match, Borussia Dortmund defeated Ukraine's Shaktar Donetsk 3-0 to advance on 5-2 aggregate.
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