Striker Vardy stunned the hosts with a second-half goal — his first in 748 minutes — as the Foxes fell to a gutsy 2-1 last-16 defeat in Spain.
It came after Schmeichel had saved an early Joaquin Correa penalty and gave Claudio Ranieri’s side a crucial away goal after they were outplayed by the hosts in the first leg.
“The away goal’s massive,” said Schmeichel. “That was something we’d hoped we could get going back to the King Power, because anything could happen there.
“It’s a joy to play in these types of games and tonight was something that every single player was looking forward to. You could see how everyone ran their socks off and worked so hard.”
Schmeichel admitted the Foxes were further motivated to perform well in Andalusia given they are fighting to retain their top-flight status back in England, hovering one point above the relegation zone after 25 games.
“Going into it we were all about how much we were hurting because of what’s happened this season.”
Manager Claudio Ranieri is feeling positive about Leicester’s chances of reaching the last eight.
“They showed their quality and we showed our big heart, big organisation and belief. We believed and never gave up. I am very satisfied.
“Everything is open and we are ready for the battle.”
Pablo Sarabia and Correa had put Sevilla into a deserved lead but Vardy’s first European goal put a completely different complexion on next month’s second leg at the King Power Stadium.
But for Schmeichel’s first-half heroics Leicester would have been out of the tie before half-time with Sevilla’s lead failing to reflect their utter dominance. The Dane pulled off a string of saves as the Foxes survived a first-half onslaught but hung on to set up a winner-takes-all showdown on March 14.
Without a Premier League win and goal in 2017, and having been dumped out of the FA Cup by Millwall on Saturday, Leicester were looking to Europe to gain momentum.
Sevilla, looking to reach the Champions League quarter-finals for the first time since 1958, signalled their early intent as Sarabia shot over.
The hosts’ early domination would have been a growing concern to Ranieri with Vardy isolated, eventually having just 10 first-half touches, and having to feed off hopeful long balls.
Schmeichel bailed the Foxes out constantly during the first half — starting with a 15th-minute penalty save.
It all stemmed from poor defending as Robert Huth failed to clear before Wes Morgan chopped down Correra as he went to shoot. It was a clear penalty but Correra wasted the chance as his tame spot-kick was easily stopped.
The miss failed to dampen Sevilla’s desire and Sergio Escudero was the next to be denied by Schmeichel — before they finally beat the Dane after 25 minutes.
Escudero’s delicious cross did the damage as Sarabia rose above the hapless Fuchs to plant a brilliant header in off the far post.
It was the first time Schmeichel had conceded in the Champions League this season and he was forced into action less than a minute later when he turned Stevan Jovetic’s deflected effort over.
Sevilla’s relentless pace and pressure which should have yielded more than one goal.
Schmeichel stopped Correa from making it 2-0 with another low stop as Leicester survived further first-half trouble as Vitolo headed over in added time.
Vitolo almost made it 2-0 five minutes after the break when his shot from the tightest of angles brushed the face of the post.
Correa made up for his penalty miss after 62 minutes.
Again it was too easy as Jovetic bullied his way onto a bouncing ball in the box and he slipped in Correa to fire in off the bar from six yards.
Thhe hosts went looking for a third which would likely kill off the tie but they were stunned when Vardy pulled a goal back with 17 minutes left.
Demarai Gray and Danny Drinkwater combined on the left for Drinkwater to break free and cross for Vardy to convert his first goal since December 10 from close range.
The hosts were rattled but Schmeichel still needed to save from Vitolo with seven minutes left and Adil Rami hit the bar late on
Sergio Rico, Rami, Lenglet (Carrico 55), Escudero, Mariano, Nzonzi, Sarabia, Nasri, Vitolo, Jovetic, Correa (Iborra 63).
Schmeichel, Simpson, Morgan, Huth, Fuchs, Albrighton (Amartey 87), Drinkwater, Ndidi, Mahrez, Musa (Gray 57), Vardy.