Poor marking from a short corner granted Wilfred Ndidi a rare goal in the opening minutes when his powerful strike from outside the penalty area put the Foxes up. James Maddison later doubled the hosts' advantage when easing past Blues defender Reece James to score comfortably before the half-time whistle.
Substitute Timo Werner did find the back of the net late on for Frank Lampard's men when glancing a free kick past Kasper Schmeichel, though this was quickly ruled out for offside. Chelsea remain five points behind fourth placed Liverpool having played a game more than their Merseyside rivals, while Leicester are top of the league for now.
There are very few positives for Chelsea to focus on from this evening's game. However, reliable midfielder Mason Mount proved himself as a valuable asset to the club with his relentless work-rate, desire to win the ball and frustration at his teammates' sub-standard performances. You wouldn't rule out Mount becoming a club captain in the future.
It was a bitter night for Chelsea supporters as rarely did they look like challenging Schmeichel between the Foxes' goalposts. Chelsea seriously struggled to play out of their own half in the first half especially and too often lost possession in the early phases of a transition.
Full backs Reece James and Ben Chilwell got themselves high up the pitch when the visitors pressed forward on the rare occasion, but this left Thiago Silva and Antonio Rudiger isolated which led to Jamie Vardy becoming a bigger threat than he can be.
Manager rating out of 10:
4 -- Calls from Chelsea fans for Lampard to be shown the door are now increasing exponentially, and this evening's performance only added to those calls. Defensively, Chelsea were again severely disorganised and appeared vulnerable too often for a club wishing to challenge for a top four spot.
Player ratings (1-10; 10 = best, players introduced after 70 minutes get no rating)
GK Edouard Mendy, 5 - Punched the occasional long-range strike wide of goal, but this performance will be remembered for the woeful defensive display in front of him that left Chelsea's shot-stopper with little chance to keep the hosts' threats to a minimum.
DF Reece James, 4 - Poor defending generally, but woeful man-marking in the seconds prior to Foxes' second goal - scored by Maddison - will anger Lampard. At the other end of the pitch, James got forward but was rarely a threat. Poor game.
DF Thiago Silva, 5 - Forced an easy near post save out of Schmeichel when connecting well with Mount's inswinging corner in the early minutes. But his performance nose-dived from there - man-marking was poor and communication with his teammates was evidently packed with mixed messaging.
DF Antonio Rudiger, 5 - Poor communication with Silva in the build up to Leicester's second goal which seemingly took the game away from Chelsea - was caught ball watching one too many times and paid the ultimate price. Found himself being bossed around by Vardy too often as well.
DF Ben Chilwell, 5 - Returning to the King Power Stadium for the first time since leaving Leicester for Chelsea in August last year, and most certainly had a game to forget. Pressed forward when required as an attacking full-back, but this left Silva and Rudiger vulnerable in behind and Chelsea can consider themselves lucky that Vardy didn't cash in on a goal or two.
MF Kai Havertz, 4 - Continues to struggle for form in the Premier League following his switch from Bayer Leverkusen. First touches were off and too often led to cheap giveaways of possession, this led to frustration which in one transition of play earned him a booking.
MF Mateo Kovacic, 5 - Reacted far too late when Maddison linked up with Marc Albrighton from a corner to fortuitously tee up Ndidi for Foxes' first. There was a certain lack of urgency from Kovacic in midfield before a poor challenge on Maddison shortly into the second half earned him a cheap yellow.
MF Mason Mount, 7 - One of Chelsea's few bright sparks. Delivered some decent crosses from set pieces to threaten Schmeichel's goal via headers of his attacking teammates. Although a free kick on the edge of the penalty area was ballooned over the hosts' crossbar, Mount injected good energy into the visitors' game.
MF Callum Hudson-Odoi, 5 - Had a wonderful opportunity to put Chelsea ahead on the half-hour mark where he really should have hit the target. Instead, he crashed his shot into Schmeichel's near-post side netting. Disappointing performance where his involvement was minimal.
MF Tammy Abraham, 5 - Touches were heavy and his involvement was minimal. Another very sub-standard performance from Abraham who arguably could have been removed from the field by Lampard early in the second half. Never looked like threatening the hosts' goal. His search for a first goal this season continues.
FW Christian Pulisic, 5 - Linked up well with a smart one-two with Hudson-Odoi on one occasion that almost led to a goal, but otherwise lost possession far too often and his attempted playmaking moves were cut out. Leicester successfully nullified his threat in the hosts' penalty area.
FW Timo Werner (For Hudson-Odoi), 6 - Had a goal disallowed for offside by the finest of margins late in the game. Injected some spark into the visitors' game, but generally didn't have enough time to make a serious impact.
MF Hakim Ziyech (For Havertz), 6 - Stepped inside in the final minute to pull a shot off with his stronger left foot, should've instead trusted his weaker right as he had the time and space to focus. Will be disappointed not to have made a bigger impact.