The Rams’ midfielder struck twice in the opening 15 minutes and Gareth Taylor’s youngsters failed to respond, though they remain top of the U18 Premier League.
Despite enjoying the lion’s share of possession throughout, City couldn’t find a way back into the game after Knight’s quickfire brace.
The 16-year-old put the hosts ahead with the game just five minutes old and did so in fine fashion.
Yeboah Amankwah did well to cut out Jayden Bogle’s low cross, but his clearance fell invitingly for Knight, who arrowed an unstoppable strike past Pawel Sokol from 25 yards.
Six minutes later he was at it again.
After good work from winger Jayden Mitchell-Lawson, Knight reacted quickest to a loose ball in the area to double Derby's lead.
The stats showed City were more than a match for the opposition, enjoying nearly 60% of possession and creating 12 chances, with a breakthrough proved elusive.
Referee Jack Shepherd handed the visitors the latest of lifelines when he pointed to the penalty spot in the 90th minute and a goal would have no doubt set up a frantic finale.
but his attempt at the spectacular failed as he put too much on his chip and sent the ball over the bar.
Despite the defeat, City hold onto top spot in the league after Manchester United and Liverpool played out a 2-2 draw in one of the day’s earlier kick offs.
Had United won, they would have leapfrogged City, who now hold a one point advantage.
How they lined up
Taylor made seven changes to the team that started against Norwich City in the U18 Premier League Cup.
Sokol was back in goal and in front of him was a back four of Jeremie Frimpong, Eric Garcia, Amankwah and Ryan Corrigan.
Iker Pozo sat at the base of midfield with Tommy Doyle and Nmecha just in front of him.
Keke Simmonds played as a central striker with Ogunby and Reece Devine on the right and left wing respectively.
City’s FA Youth Cup campaign kicks off on Thursday 14 December, with Simon Davies taking charge in that competition this season.
The Blues make the long journey to Plymouth Argyle for a third round tie.
Two days later and league action returns as the youngsters head to West Bromwich Albion for what is the final competitive fixture before the Christmas break.