The hosts took the lead in the first half through Andrew Nelson, who fired in past Leicester shot-stopper Max Smith-Varnham.
City’s Kairo Mitchell then burst through on the break, but couldn’t direct his effort on target as the young Foxes looked for an equaliser.
Following a sustained spell of pressure, Trevor Peake’s outfit found a levelling goal with 20 minutes to play through Harvey Barnes, who finished well while one-on-one with Sunderland’s James Talbot.
Talbot then produced two outstanding saves to deny the Foxes’ frontline, before Jordan Blinco side-footed in late on to seal a victory for the Black Cats.
Leicester next face a U18 Premier League trip to Derby County on Saturday 18 April (11am kick-off).