Despite going behind to a Jacob Brown penalty inside five minutes, it took less than double that time for the Foxes to open up a 3-1 lead during a frantic opening spell.
Darnell Johnson applied a neat finish during goalmouth scramble before a brace from defensive colleague Sam Hughes added to the turnaround, taking his tally to six this term.
Just before half-time, it then fell to Layton Ndukwu in the box to open up a three-goal lead - with his fifth strike of the campaign - on a memorable night in Whetstone.
After the break, an effort from George Thomas cannoned back off the post, into Tykes defender Louis Wardle and inside the post before Josh Gordon made it six for the Foxes.
With two minutes of the 90 remaining, a deflected long-range attempt from Hamza Choudhury looped over visiting goalkeeper Jack Walton to complete a wonderful night for the Under-23s.
Ahead of kick-off, Steve Beaglehole made two changes from the side who drew 1-1 with Manchester United at Leigh Sports Village on Monday night in Premier League 2.
The Foxes, who are now unbeaten in 17 outings in all competitions, brought in Daniel Iversen for Max Bramley in goal while Kiernan Dewsbury-Hall came in for forward Josh Eppiah.
It looked like it could have been a tough night for Beaglehole’s boys just five minutes in when Connor Wood was adjudged to have felled Romal Palmer in the penalty box by the referee.
However, Brown’s tidy finish into the bottom corner from 12 yards appeared to simply spur City on to perform a quite remarkable reversal of fortunes.
It took just under 120 seconds for Johnson, a UEFA EURO U19s winner with England last summer, to blast the ball beyond Walton in the Barnsley net to level the scores.
They were in front after another four minutes when a bullet header from Hughes found its way into the net before the ex-Chester man doubled his tally in no time.
The Foxes were really causing havoc in the Barnsley box and, when it fell to Ndukwu in space, there was no doubt in the tenacious winger’s mind as he picked his spot low in the left corner.
Wardle's own goal didn't help matters for the visitors from South Yorkshire before Gordon and Choudhury added another two notches on the scoresheet.
Major moment…
After watching his side go a goal down in the opening five minutes, a quick-fire double from Sam Hughes turned the match on its head and put his side firmly in the driving seat.
The former Chester man is now level on six goals for the season with forward Admiral Muskwe, despite playing in central defence or midfield this term.
Who impressed?
Not for the first time this year, Sam Hughes was a standout performer for the Development Squad, proving to be a key man at both ends of the pitch.
On past outings, the 20-year-old has started in a more advanced midfield role. On this showing, he can even find the net from defence with two fine efforts from set-plays.
Where does it leave us?
City have strengthened their position at the top of Group F with a seven-point gap over second placed Everton - and a +9 goal advantage.
They have a two-month hiatus from PL Cup responsibilities until February, when they face Portsmouth (A) and Everton (H) as they attempt to wrap up qualification.
Coming up…
The Foxes now have a two-week festive break from action before they return to duty on Wednesday 3 January to face Tottenham Hotspur at Holmes Park in PL2 (7pm kick-off).
Then it’s a trip to Boundary Park to tackle Oldham Athletic in Round 3 of the Checkatrade Trophy on Tuesday 9 January (7:30pm).
The details…
City: Iversen, Johnson, Wood (Tee 57), Kaba Sherif, Knight, Hughes, Thomas, Choudhury (c), Gordon (Eppiah 63), Ndukwu, Dewsbury-Hall.
Subs not used: Martis, Bramley, Leshabela.
Goals: Johnson 7, Hughes 11, 14, Ndukwu 38, Wardle (og) 56, Gordon 60, Choudhury 88.
Barnsley: Walton, Wardle, Williams, Tingle (Greenfield 72), Smith, Lund, Palmer, Kay, Brown (c), Rowe, Berkovits (Ocran 72).
Subs not used: Gagen, Miller, Greatorex.
Goal: Brown (pen) 5.
Attendance: 209