Callum Wright's powerful drive handed the Foxes an early lead, which was curtailed by Charlie Brown before the break, but Tyrese Shade restored the hosts' advantage four minutes into the second half.
There was an early scare inside two minutes as Juan Castillo crossed into the area and, while home goalkeeper Viktor Johansson got a hand to it, the ball fell perfectly for George McEachran to get an effort in on goal, but the young Blues midfielder’s attempt hit the top of the crossbar and went behind.
At the other end, following industrious work from Kiernan Dewsbury-Hall, it came to Admiral Muskwe in the penalty area and only a smart stop from Jamie Cumming denied the Zimbabwean international.
Wright, though, had more good fortune in front of goal in the 22nd minute when he latched onto Shade’s through ball to cushion it beyond Cumming and give the Foxes an early lead.
Defender Pascanu also played a key role in the opposite penalty area, getting Martell Taylor-Crossdale’s attempt off the line shortly after, but the visitors were to register on the scoresheet in the 32nd minute.
Brown, who had already posed a threat on the left side for Chelsea, ran into the box and tidily tucked it away into Viktor Johansson’s bottom corner to restore parity on the scoresheet.
After the interval, it took just four minutes for City to regain their supremacy as James drove forward from the centre of midfield and played in Shade, whose deflected shot from outside the box – which ricocheted off Marc Guehi’s heel – eventually found the back of the net.
In search of another to cement their advantage, Wright looked for the top corner with a speculative effort with 20 minutes to go, but it drifted wide of Cumming's post.
However, in a final 15 minutes which featured few major incidents, the Foxes showed maturity to see out the result and end 2018 with a sixth league victory of the season so far.
Matty James made his mark for the Club's Development Squad.
While primarily in the side to continue his recovery from an Achilles injury, first team star Matty James was a standout performer for the Development Squad on Monday evening.
The 27-year-old, who is nearing a return to full fitness, played a crucial role in City’s second goal of the night, bursting out into the final third before expertly laying it up for Tyrese Shade.
Where does it leave us?
Defender Josh Knight had scored winners in both of City's previous matches.
Leicester overtake Chelsea into fourth place - on 21 points - following their 13th match of the 2018/19 Premier League 2 Division 1 campaign. Everton, meanwhile, lead the way on 25 points.
A smart goal from Callum Wright sent the Foxes on their way.
City’s youngsters now have a three-week festive break from action before they welcome Everton to Holmes Park in Premier League 2 on Monday 7 January, 2019 (7pm GMT kick-off) – live on LCFC TV.
City: Johansson, Johnson (c), Ughelumba, Kaba Sherif (Ramsay 74), Knight, Pascanu, Dewsbury-Hall, James, Muskwe (Leshabela 88), Wright, Shade (Edwards-John 90)
Subs not used: Davies, Tee
Goals: Wright 22, Shade 49
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