The visitors raced into a three-goal lead thanks to strikes from Ragnar Mar-Larusson, James Tilley and an early own goal from Michael Kelly.
But City rallied and pulled one back on the stroke of half-time through Layton Ndukwu, before second-half strikes from Keenan King and Danny Rowe hauled the young Foxes level.
And with plenty of momentum behind them, City went on to win the game through Ndukwu, who struck with nine minutes to play to seal a memorable victory for his side.
Brighton got off to a blistering start. Jordan Maguire-Drew fired an effort towards goal that City defender Kelly turned past Max Smith-Varnham in an attempt to clear the ball with just six minutes on the clock.
And the visitors doubled their lead eight minutes later. Smith-Varnham did well to deny the initial effort, but Mar-Larusson was on hand to turn in the rebound to make it 2-0.
Captain Matty Miles then delivered a pin-point free kick into Cedric Kipre, but the defender couldn’t generate the desired power to beat goalkeeper Bailey Vose, who collected comfortably.
Brighton were lethal on the counter-attack and made it 3-0 on the half-hour mark through Tilley, who turned in Mar-Larusson’s cross from the right.
England Under-17s international Ndukwu reduced the deficit with one minute of the first half to play, curling in from 20 yards to give his side a lifeline before the break.
City mounted a siege on the Brighton goal in the second period, with Rowe, King and Ndukwu all going close with individual efforts in the opening stages.
A lightning break from City eventually reduced Brighton’s advantage to one goal. Harvey Barnes flew down the right wing and delivered to King, who powered in a header past Vose with 61 minutes gone.
And just 10 minutes later, Trevor Peake’s side were level. Brighton could only half-clear Miles’ free kick to Rowe, who collected the loose ball before firing in to make it 3-3 with 19 minutes to play.
The Seagulls looked to regain the lead shortly after, but Maguire-Drew’s fearsome 20-yard free kick was blocked by a well-placed City wall.
The young Foxes turned the game on its head on 81 minutes. Barnes’ initial strike was blocked well by the Brighton defence, but Ndukwu instinctively poked home the rebound to give City the lead.
Substitute Admiral Muskwe looked to add a fifth in injury time, but the striker lifted his effort over the bar from the edge of the box.
The result sees City head into their FA Youth Cup Semi-Final Second Leg tie with Manchester City on the back of a fine win, meaning there is plenty to play for when the two sides meet at King Power Stadium on Wednesday 8 April (7.45pm kick-off).
CITY: Smith-Varnham, Johnson, Kelly, Choudhury, Knight, Kipre, Barnes, Miles (c), King (Muskwe 83), Rowe (Mitchell 83), Ndukwu
SUBS NOT USED: Pascanu, Bramley, Fura
GOALS: Ndukwu 44, 81, King 61, Rowe 71
BRIGHTON: Vose, Tighe, Cox, Collar, White, Horncastle (c), Maguire-Drew, Pring, Mar-Larusson (Davies 87), Tilley, Barnett (Ajiboye 57)
SUBS NOT USED: Hobbs, Cadman, Meekums
GOALS: Kelly o.g. 6, Mar-Larusson 14, Tilley 30
REFEREE: Mr K. Hatford