City had been much the better side for long periods and led through James McAtee's superb effort, but Rovers grabbed an equaliser with almost their first shot on goal with 19 minutes remaining.
Then, after keeper James Trafford was shown a straight red in added time, the home side grabbed a winner from the resulting free-kick.
It was hardly deserved but another harsh lesson learned for this young City side who had looked set for a first Premier League 2 win of the campaign.
After a thrilling but ultimately disappointing 3-3 opening day draw with Derby County, Enzo Maresca’s hard-working side were quick out of the blocks against Blackburn Rovers.
Just three minutes in and Sam Edozie’s plea for a penalty after he was knocked to the ground was waved away by the referee, but it wasn’t long before City were ahead.
On nine minutes, McAtee won possession just inside the Rovers half before advancing towards goal and unleashing a shot into the top left-hand corner from 18 yards – his third of the campaign already.
City almost doubled the lead on 28 minutes when Edozie found Oscar Bobb on the edge of the box and the winger’s stinging shot was superbly tipped over by Rovers keeper Jordan Eastham.
The hosts’ attacks in the first-half rarely made it into the final third with keeper James Trafford rarely called upon.
City looked in complete control until the 71st minute when a cross into the box was controlled and thumped into the roof of the net by Connor McBride from close range.
It was frustrating to say the least for a dominant City who had defended solidly throughout.
The response was good, however, with sub Darko Gyabi firing a shot a few feet over and the impressive McAtee almost weaving his way through before the danger was cleared.
And Harvey Griffiths could have snatched a late winner after Edozie’s burst through ended with the keeper stranded out of his box but the shot went a couple of yards wide.
But just as the game looked to be heading for a draw, Trafford collided with a Rovers forward in added time and was shown a straight red.
From the resulting free-kick the hosts snatched a 97th-minute winner as Lewis Thompson turned the ball in from close range to take all three points.
How we lined up:
Trafford, Robinson, Burns, Mbete-Tabu, Ogbeta, Egan-Riley, Bobb, Knight, Simmonds, McAtee, Edozie
Subs: Sobowale, Slicker, Griffiths, Gyabi, Wright-Phillips
What it means…
The EDS have one point from the first two PL2 games.
City travel to Scunthorpe United in the Leasing.com trophy a week on Tuesday.