Defeat On The Road For City's Development Squad
Callum Connolly's 60th minute opener gave Everton the lead in an evenly contested game, before Ellis Simms and Josh Bowler added further goals for the Toffees.
City came into the game off the back of a 2-0 victory over Manchester United Under-23s in last week's Premier League 2 opener at Leigh Sports Village.
There was just one change to the starting XI from that fixture, with Callum Wright recovering from injury to play on the left of midfield and Shane Flynn dropping to the bench.
City lined up in a familiar 4-1-4-1 formation with Callum Hulme sitting in front of the back four and Ali Reghba acting as the line forward, following his goal against the Red Devils.
Everton, meanwhile, were looking to bounce back from their opening fixture defeat at the hands of Merseyside rivals Liverpool.
Josh Bowler had the first attempt for the home side inside the first minute, cutting onto his left and firing a low shot that City 'keeper Jakub Stolarczyk dealt with comfortably.
Leicester started to get a hold on the game and had a claim for a penalty turned away when Khanya Leshabela got into the box and tangled with Kyle John, but the decision went the other way.
A first attempt on goal came soon after for the Foxes as Vontae Daley-Campbell's cross was flicked wide of goal by Tyrese Shade.
The ball then landed at the feet of the returning Wright, 20 yards from goal, but his whipped effort was also struck narrowly off-target.
Everton were still an attacking threat at the other end and could have taken the lead via Tyler Onyango and then Bowler, who both saw goal-bound shots blocked by City captain Sam Hughes.
And there was a golden opportunity for the Toffees to break the deadlock when Bowler picked out Simms in the middle, but Everton's No.9 failed to find the target.
Bowler continued to cause problems for City's backline, once again cutting inside onto his left and curling an effort just wide of the far post, on the half-hour mark.
Half chances continued to be created at both ends of the pitch. Leshabela cut inside onto his right foot but saw his shot blocked in the box, while Wright's header was also blocked. Shade then went for goal himself, shooting just over the bar.
As the half entered the final five minutes, Bowler fed Simms, who attempted to chip the ball over the onrushing Stolarczyk, only for the ball to land the wrong side of the post.
Stolarczyk was called into action again before half-time, denying Tyler Onyango the opener with a diving fingertip stop.
A City chance came just after the break as Ali Reghba's header was saved by Everton 'keeper Harry Tyer, while Bowler couldn't keep his shot down at the other end.
The ball then fell for substitute Rhys Hughes to strike on the half volley, but again it was too high to trouble Stolarczyk.
The game was becoming increasingly stretched as Daley-Campbell drove to the byline and picked out Shade in the middle, but the midfielder could not quite direct his flicked effort on target.
The lively Bowler continued to run at the Leicester defence, twisting one way and then the other before his strike deflected wide. And the deadlock was broken from the corner as Connolly headed in Hughes' in-swinging set piece on the hour mark.
A quick one-two set Simms away as the hosts looked to increase their advantage, but Stolarczyk was on hand to turn the ball behind.
Simms' clinical finish doubled the hosts' advantage on 77 minutes and the game was wrapped up 10 minutes from time when Hughes grabbed his second assist of the night, finding Bowler to strike into the top corner from the edge of the box.
Wright was close to reducing the deficit with a wicked free-kick that flashed past the far post and had Tyrer scrambling in the Everton goal.
Daley-Campbell also forced Tyrer into a diving stop, as did Reghba, but neither could force a late breakthrough, and it was the Toffees who took all the three points.
Major moment…
The contest could have gone either way before Callum Connolly headed Everton into the lead - and the home side never looked back from there on, increasing their advantage as City pushed forward to try and find an equaliser.
Where do we stand?
City sit seventh in the Premier League 2 table after matchday two with three points from the opening two games. Only goal difference separates the Foxes from fourth place Everton.
Coming up…
Next up for the Foxes is a trip to Lancashire FA, Leyland to face Blackburn Rovers on Monday 28 September (7pm BST kick-off).
Billy Barr's Rovers side defeated Manchester City 2-1 in their first league fixture last week.
The details…
City: Stolarczyk, Daley-Campbell, Johnson, Hughes (c), Clark, Hulme (Marcal-Madivadua 77'), Shade (Flynn 67'), Leshabela, Ndukwu (Pennant 67'), Wright, Reghba.
Subs not used: O'Connor, Bosworth.