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.
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.
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.
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.
Wood struck his eighth goal of the Championship season with his calm finish to secure back-to-back Championship wins for Blues before the international break.