Birmingham struck two second-half goals to end Leicester's seven-match unbeaten run in the Championship.
Marlon King made it 1-0 from the penalty spot after Andy King brought down Jean Beausejour.
Leicester skipper Matt Mills, who had a first-half effort saved, then saw red for a late tackle on Morgaro Gomis as Blues started to take control.
Chris Wood secured victory with a calm late finish, slotting home from a tight angle after rounding Kasper Schmeichel.
Leicester City manager Sven-Goran Eriksson backs ref on Mills red
It was a fully deserved victory for Blues, whose rebuilt squad are starting to gel under the calm and steady management of Chris Hughton.
But the result is a backwards step for Sven-Goran Eriksson's Leicester, who had not conceded in their previous four games as they strive for the sort of consistency that will bring them their
stated goal of promotion
The Foxes had not conceded in 412 minutes going into the contest, a sequence that stretched back to 10 September, while only Barnsley had scored against Birmingham at St Andrew's in the Championship.
PAUL FLETCHER'S BLOG
“Birmingham and Leicester both radically overhauled their squads in the summer - and on the evidence at St Andrew's on Sunday it is the club which acted out of financial necessity that is starting to look in better shape”
Perhaps not surprisingly, chances were at a premium throughout the contest, particularly during an atrocious first half during which neither side appeared to have the invention to open up their opponents.
Birmingham should have broken the deadlock through Steven Caldwell after he connected with a superbly delivered free-kick from Beausejour but the defender headed into the side-netting.
The home side were more than a match for their expensively assembled opponents, although the Foxes did force one save from Boaz Myhill when Mills shot on the turn after the home team failed to clear from a long throw.
The news that the start of the second half was delayed by five minutes so fourth official Kevin Wright could warm-up following an injury to referee Graham Salisbury was easily the most dramatic moment of the afternoon up until that point.
Chris Hughton agrees with red card
However, Blues came out with a much-improved desire and sense of urgency after the break, with Beausejour striking the post with a thunderous effort before King scored from the spot.
The match then swung further in favour of the home team when Wright red-carded Mills after a late challenge on Gomis where he had both feet off the ground.
The Foxes looked stunned and Eriksson took drastic action, bringing on John Pantsil, Richie Wellens and Jermaine Beckford within 10 minutes of Mills' dismissal.
However, Blues continued to look the most threatening, with Schmeichel saving sharply from in-form striker Wood, who then played King through with an exquisite flick - but the Leicester goalkeeper again rescued his side with a good low save.
Foul by Keith Fahey on Richie Wellens, free kick awarded. Richie Wellens takes the indirect free kick.
Effort from outside the penalty box by Chris Burke goes wide left of the target.
Jermaine Beckford has a shot and missed to the right of the target.
Substitution (Birmingham) makes a substitution, with Nikola Zigic coming on for Chris Wood.
Wade Elliott takes a shot. Save by Kasper Schmeichel.
Unfair challenge on John Pantsil by Wade Elliott results in a free kick. John Pantsil restarts play with the free kick.
Substitution (Birmingham) makes a substitution, with Wade Elliott coming on for Jean Beausejour.
Marlon King provided the assist for the goal.
83:31 Goal scored
Goal - Chris Wood - Birmingham 2 - 0 Leicester Chris Wood scores a goal from close range to the bottom right corner of the goal. Birmingham 2-0 Leicester.
Free kick awarded for an unfair challenge on Steven Caldwell by David Nugent. Boaz Myhill takes the indirect free kick.
Shot from just outside the penalty area by Paul Konchesky misses to the left of the target.
Marlon King takes a shot. Comfortable save by Kasper Schmeichel.
Marlon King takes a shot. Save made by Kasper Schmeichel.
Chris Wood takes a shot. Save made by Kasper Schmeichel.
Unfair challenge on Marlon King by John Pantsil results in a free kick. Liam Ridgewell restarts play with the free kick.
Chris Burke concedes a free kick for a foul on Gelson Fernandes. Kasper Schmeichel takes the free kick.
The offside flag is raised against Marlon King. Free kick taken by Souleymane Bamba.
The offside flag is raised against David Nugent. Boaz Myhill takes the indirect free kick.
Substitution Jermaine Beckford on for Darius Vassell.
The referee blows for offside. Boaz Myhill takes the indirect free kick.
Substitution Yuki Abe goes off and Richie Wellens comes on.
Keith Fahey takes a shot. Comfortable save by Kasper Schmeichel.
The referee blows for offside. Indirect free kick taken by Boaz Myhill.
Dismissal Matt Mills is shown a red card.
Liam Ridgewell takes the indirect free kick. Marlon King is ruled offside. Souleymane Bamba takes the indirect free kick.
Substitution John Pantsil comes on in place of Neil Danns.
Matt Mills gives away a free kick for an unfair challenge on Morgaro Gomis.
Foul by Jean Beausejour on Lee Peltier, free kick awarded. Kasper Schmeichel takes the free kick.
Unfair challenge on Lee Peltier by Jean Beausejour results in a free kick. Free kick crossed left-footed by Paul Konchesky from right wing.
49:36 Goal scored
Goal - Marlon King - Birmingham 1 - 0 Leicester Placed penalty scored by Marlon King. Birmingham 1-0 Leicester.
Assist by Jean Beausejour.
Andy King concedes a Penalty for a foul on Jean Beausejour.
Outswinging corner taken from the left by-line by Jean Beausejour.
Chris Burke crosses the ball, Matt Mills manages to make a clearance.
Jean Beausejour takes a shot.
The referee gets the second half started.
45:00 +2:17 Half time
Half Time The referee blows for half time.
Steven Caldwell gives away a free kick for an unfair challenge on Darius Vassell. Paul Konchesky takes the free kick.
Unfair challenge on Stephen Carr by Paul Konchesky results in a free kick. Free kick crossed left-footed by Jean Beausejour, Andy King manages to make a clearance.
David Nugent fouled by Pablo Ibanez, the ref awards a free kick. Paul Konchesky takes the free kick.
Corner from right by-line taken by Neil Danns.
Morgaro Gomis concedes a free kick for a foul on Yuki Abe. Paul Konchesky crosses the ball in from the free kick, clearance made by Steven Caldwell.
Centre by Marlon King, save made by Kasper Schmeichel.
Indirect free kick taken by Matt Mills.
Booking Jean Beausejour receives a yellow card.
Jean Beausejour concedes a free kick for a foul on Lee Peltier.
Foul by Gelson Fernandes on Chris Wood, free kick awarded. Stephen Carr restarts play with the free kick.
Corner taken right-footed by Neil Danns.
Matt Mills takes a shot. Save by Boaz Myhill.
Foul by David Nugent on Pablo Ibanez, free kick awarded. Boaz Myhill takes the indirect free kick.
The assistant referee signals for offside against Marlon King. Kasper Schmeichel takes the free kick.
The referee blows for offside. Indirect free kick taken by Boaz Myhill.
Inswinging corner taken right-footed by Neil Danns from the left by-line to the near post, Marlon King makes a clearance. Corner from the right by-line taken by Neil Danns, Chris Wood makes a clearance. Lee Peltier takes a shot. Chris Wood gets a block in. Corner taken by Neil Danns.
Paul Konchesky produces a cross, comfortable save by Boaz Myhill.
A cross is delivered by Darius Vassell, comfortable save by Boaz Myhill.
Andy King gives away a free kick for an unfair challenge on Jean Beausejour. The ball is crossed by Jean Beausejour, Steven Caldwell has a headed effort at goal from close range which goes wide of the left-hand post.
Corner taken by Jean Beausejour from the right by-line to the near post, Andy King manages to make a clearance.
Matt Mills produces a right-footed effort from long distance that goes harmlessly over the bar.
Free kick awarded for a foul by Liam Ridgewell on Lee Peltier. Free kick crossed left-footed by Paul Konchesky, save by Boaz Myhill.
Neil Danns fouled by Jean Beausejour, the ref awards a free kick. Lee Peltier takes the free kick.
Liam Ridgewell is flagged offside by the assistant referee. Lee Peltier takes the free kick.
Chris Burke takes a shot. Save made by Kasper Schmeichel.
Neil Danns gives away a free kick for an unfair challenge on Liam Ridgewell. Boaz Myhill takes the free kick.
The offside flag is raised against Darius Vassell. Pablo Ibanez takes the free kick.
The referee gets the game started.
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