The game was evenly balanced and goalless until the 68th minute, when Joe Grayson found the net before Connor McBride's double and a fourth from Luke Brennan secured three points for the hosts.
Steve Beaglehole made two changes to the team that lost 3-0 to Everton Under-23s last time out, with Darragh O'Connor and Sidnei Tavares coming in for Darnell Johnson and Layton Ndukwu.
The visitors lined up with Tavares and Tyrese Shade out wide, supporting Ali Reghba up front, while former Blackburn midfielder Callum Wright was also in the starting XI.
Rovers made five changes, including a first start for Spanish centre-back Daniel Ayala, who signed for the club earlier this month.
The home side came forward at pace early on, enjoying large spells of possession, without creating too many clear-cut opportunities. Dan Pike's deep cross evaded everyone in the box before Sam Burns dragged his shot wide.
However, Brad Lyons did almost open the scoring when Pike's cross found its way to the Blackburn midfielder, but a last-ditch block from Darragh O'Connor diverted the goalbound effort out for a corner.
From the resulting set-piece, the ball fell to Harry Chapman on the edge of the area and he whipped in a powerful strike that was just too high to trouble Jakub Stolarcyzk.
City grew into the game as the half wore on, and some good work down the right from Vontae Daley-Campbell fashioned the Foxes' first chance.
He cut the ball back for Reghba, but City's No.9 could not keep his shot down from just inside the area.
Captain Sam Hughes then made a marauding run forward, which ended with a strike from distance that deflected over the bar.
Daley-Campbell continued to create down the right and his powerful run found Khanya Leshabela, whose left-footed shot also failed to trouble Andy Fisher in the Rovers goal.
Blackburn started the second-half on the front foot as Chapman's centre found Stefan Mols, who flicked a header wide of goal.
Mols once again leapt highest from Lewis Thompson's cross soon after, heading towards goal and finding Stolarcyzk in the way, while Chapman tried to find the target and again Stolarcyzk held firm to claim the ball.
At the other end, the Foxes wasted a golden opportunity to break the deadlock. Mitchell Clark won back possession high in the Blackburn half, exchanged a one-two with Ali Reghba and then skied his shot over the bar.
Clark was also involved at the other end, somehow managing to clear Chapman's goalbound effort off the line after Stolarcyzk had palmed Thompson's cross into the six-yard box.
But City would be made to pay for that earlier missed chance, on 68 minutes. Chapman's corner was struck by Thompson and flicked on by Grayson, wrong-footing the City 'keeper and finding the back of the net.
The visitors tried to respond via substitute Dempsey Arlott-John, but nobody was on the end of his low cross.
On 79 minutes it became two as McBride was able to steady himself in the box and slot the ball home to extend the advantage.
Chapman then laid off Pike, who cut the ball across for McBride to convert his second with a sweeping finish from inside the box.
McBride then turned provider, teeing up Brennan, who, after a neat first touch, found the corner to wrap up the scoring.
Jakub Stolarczyk made some assured saves for the Foxes in the first half.
The game could have gone either way until the opener, with both sides going close in the first hour. But once Blackburn went ahead, they made City pay with some clinical finishing in the final 20 minutes.
Where do we stand?
Despite not being able to find the net, Ali Reghba battled away for City in forward positions.
Leicester City's Development Squad sit ninth in the Premier League 2 table on three points from three games, while Blackburn move up to third with two wins from two.
Vontae Daley-Campbell started as a right full-back for the visitors.
Next up in the league for the Foxes is a trip to Loughborough University Stadium to face Derby County Under-23s on Friday 2 October (7pm BST kick-off).
City: Stolarczyk, Daley-Campbell, O'Connor, Hughes (c), Clark, Hulme (Flynn 58'), Shade (Arlott-John 72'), Leshabela, Reghba (Suengchitthawon 79'), Wright, Tavares.
Subs not used: Bosworth, Nelson.
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