Requiring a win to overhaul the Toffees and claim top spot in Group A, the young Foxes were behind to Kai Hutchison's 13th-minute goal at LCFC Training Ground.
Jake Fletcher swiftly equalised and then completed a brace just before the break to turn the game around and see us lead at half-time.
But the visitors were back on level terms courtesy of Shea Pita finding the net on the hour mark. And in the closing stages, with City throwing bodies forward in search of a winner which would qualify us for the knockout stages, Everton struck a decisive blow of their own.
Defender Francis Boggan found the goal with five minutes remaining to see Matty Taylor's side maintain a 100 per cent record and finish as group winners, while Leicester sit second after a first defeat.
It's Burnley up next after the international break in U18 Premier League North, hosting the Clarets at LCFC Training Ground on Saturday 21 November (1pm GMT kick-off).
The details
City: Lawrence, Jacklin, Simons (c), Dignum, Govan, Manyumba (Chezy 66'), Machaka (Muskwe 84'), Szembel, Irene, Swan, Fletcher.
Subs not used: Hibbins, Lawrence, Coleman, Boardman.
Goals: Fletcher 20', 39'.