The young Foxes, who face Fulham at home in the semi-finals of the U18 Premier League Cup on Wednesday, went ahead early on in Seagrave, as Henry Cartwright teed up Chris Popov in just the ninth minute. The match would quickly turn, however, for City's youngsters.
Zak Emmerson struck for the visiting side from Brighton on 16 minutes and he had a second before the interval too. In the second half, with just two minutes of normal time remaining, Leicester were pushing for an equaliser but fell victim to Emmerson's third strike of the game to seal the points for the Seagulls.
Although just City's fourth league defeat of the season, the young Foxes fall to sixth in the U18 Premier League South standings.
Following Wednesday's PL Cup last-four tie against Fulham (7pm kick-off), they head to Bearwood Park Training Ground to face Reading in the league on Saturday 19 March (12pm kick-off).
The details...
City: Doherty, Cartwright (Lewis 45'), Godsmark-Ford (c) (Briggs 46'), Grist, Kutshienza, Wilson-Brown, Lindsay, Butterfill, Cover, Popov (Javid 71'), Richards.
Subs not used: Chibueze, Cook.
Goal: Popov 9'.
All times GMT.