Shinji Okazaki and Islam Slimani struck in the second half after Jurgen Klopp’s side failed to capitalise on their first-half dominance.
Dominic Solanke, Philippe Coutinho and Alex Oxlade-Chamberlain missed decent chances before Liverpool wilted after the break.
Substitute Okazaki’s introduction — coupled with Coutinho’s withdrawal at half time — swung the game in the Foxes’ favour.
It was first blood to the Foxes with Liverpool back at King Power Stadium in the Premier League on Saturday.
Klopp gave Oxlade-Chamberlain and Solanke full debuts with Leicester making seven, giving bows to Vicente Iborra and Aleksandar Dragovic.
Ben Chilwell needed to produce an early excellent goal-saving block to deny Oxlade-Chamberlain when Leonardo Ulloa was robbed by Marko Grujic.
Four minutes later Coutinho forced Ben Hamer into a smart stop when he skipped three challenges with ease. Coutinho was the driving force and Hamer claimed his low effort as the hosts struggled to retain possession.
Apart from a tame Demarai Gray strike the Foxes were disjointed and sloppy.
The relentless Reds pinned Leicester inside their own half and more bright Liverpool work saw Robertson’s drive fly across goal before Oxlade-Chamberlain shot at Hamer with half an hour gone.
Solanke wasted Liverpool’s best opening seconds before half time when he lobbed over from close range following Coutinho’s excellent pass.
The Brazilian was withdrawn at the break for 17-year-old Ben Woodburn and with the midfielder went Liverpool’s zip.
The Foxes took a 65th minute lead through Okazaki, who had only been on the pitch 12 minutes after replacing the injured Ulloa. Liverpool half cleared a corner and when it was hooked back in, Wes Morgan’s header found Iborra and he nodded down for Okazaki to find the bottom corner from 15 yards.
Leicester wrapped up the game with 12 minutes left.
Slimani produced a rocket from the edge of the box, finding the top corner.
Hamer, Amartey, Morgan, Dragovic, Chilwell, Gray, Ndidi (Choudhury 84), Iborra, Albrighton, Slimani, Ulloa (Okazaki,53)).
Ward, Flanagan, Gomez, Klavan, Robertson, Wijnaldum (Ings 73), Henderson, Grujic, Oxlade-Chamberlain, Solanke, Coutinho (Woodburn 46). Referee: Stuart Attwell (Warwickshire).