Six minutes after an unchanged starting line-up from last Friday's 2-2 draw with Liverpool ran out in Whetstone, the Foxes were ahead in dramatic fashion.
Following a back-pass foul by Blues goalkeeper Nicolas Tié on the edge of the area, George Thomas pounced before the French shot-stopper could reset and get back into position.
Thomas quickly squared the ball across to George Hirst, giving the England youth international as much time as he desired to pick his spot and make it 1-0 to City.
Hirst should perhaps have doubled Leicester's lead shortly afterwards too, but Thomas' fizzed ball across goal bounced back off his boot and over the crossbar.
Following another snapshot opportunity, from a low Luke Thomas cross, Hirst did get another from the penalty spot after Callum Wright was felled by Tié in Chelsea's area.
Up stepped Hirst to send the visiting 'keeper the wrong way and send the Foxes into the interval in a commanding position after a dominant opening 45 minutes.
Naturally, the visitors were posed more questions of City in the second half and they halved the deficit shortly after the hour-mark through Tino Anjorin's close-range finish.
Over the course of the second period, Tyrese Shade, Vontae Daley-Campbell and Ali Reghba were all introduced to the action, although it was the Blues who threatened most.
While Viktor Johansson did not have to make a string of saves, the Sweden Under-21s goalkeeper often had to be on his toes as the visitors ventured forward.
Johansson was required with 13 minutes remaining, however, as Anjorin broke into space, but the 21-year-old home stopper showed bravery to scoop it up at the attacker's feet.
In the latter moments, meanwhile, as City switched to a back-five, the home side were resolute for long periods, but still suffered the frustration of feeling two points slip through their grasp when Ballo netted in added time to seal a share of the spoils.
George Thomas regularly combined well with George Hirst in attacking positions.
The quick thinking of George Thomas to swiftly take a City free-kick and feed George Hirst was the springboard of a productive first half performance from the home side in Whetstone.
Despite their strong showing in the opening period, however, the Foxes were ultimately cut back by Chelsea in the latter moments in frustrating fashion.
George Hirst was incredibly impressive early on in the game.
Speaking live on LCFC TV, former Foxes defender Sean St Ledger said: "It has to be George Hirst, scoring the two goals. It was unfortunate that he had to come off as he is hugely important, but he scored two goals and you can't ask for much more than that from a striker."
Where does it leave us?
Leicester City's Development Squad
City's youngsters have now played seven matches in the league this term.
The Foxes slip one place to 10th in Premier League 2 Division 1 with seven points from as many matches and a goal difference of -2.
Callum Wright looks to get the Foxes on the front foot.
City have a break from action before their next outing, a clash with Tottenham Hotspur at Lamex Stadium, on Friday 18 October (7pm BST kick-off).
City: Johnasson; Clark, Johnson, Ughelumba, L. Thomas; Leshabela (Shade 53'), Dewsbury-Hall, G. Thomas; Wright (Daley-Campbell 64'), Hirst (Reghba 70'), Muskwe
Subs not used: Stolarczyk, Eppiah
Goals: Hirst 6', 42' p
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