City came into the U18 Premier League South clash unbeaten in five games in all competitions, including an impressive 5-0 victory over Sheffield Wednesday in the FA Youth Cup last time out.
Five changes were made from the side that progressed into the fourth round of the competition, including a return for centre-back Ben Nelson.
The two teams were evenly matched in the first half but it was the Seagulls who would go into the break with a slender lead, courtesy of captain Matt Everitt's stoppage-time penalty.
Leicester faced an uphill task once Ethan Fitzhugh was shown a red card on 56 minutes and the visitors eventually made their numerical advantage count in the final few minutes of the game.
As the Foxes pushed more bodies forward to try and find an equaliser, Brighton substitute Andrew Moran provided a fresh pair of legs and two goals in quick succession - scored in the 87th and 88th minute of the contes - put pay to any hopes of a comeback.
Leicester remain 12th in the standings after 15 games, three points ahead of Southampton and three behind Reading in 11th.
City are back in Premier League U18 South action once more on Saturday 20 March, welcoming Chelsea Under-18s to LCFC Training Ground (12pm GMT kick-off).
The details...
City: Doherty; Cover, Abdullah, Nelson (Obi 45), Yfeko; Marcal-Madivadua, Fitzhugh, T. Pennant (Wormleighton 75), Braybrooke, Maswanhise (Butterfill 80); K. Pennant.
Unused subs: Chibueze, Kutshienza.