Potters forward Emre Tezgel grabbed the opener for the hosts before City were reduced to 10 men when Jadel Katongo was sent off.
City's misery was then compounded just before half-time as Tezgel completed a brace, consigning us to only our second league defeat this season.
City went into the match looking to close the gap on leaders Blackburn Rovers, but the first half was one to forget for Ben Wilkinson's side.
We went behind after 35 minutes when Stoke captain Tezgel latched onto an assist from defender Josh Bickerton.
We were given a mountain to climb just before the break when, in the space of three stoppage time minutes, defender Katongo was issued a straight red card before Tezgel doubling the host's advantage.
Wilkinson brought on Max Alleyne to try and sure up the City defence, as well as Liam Smith and Matty Whittingham but we were unable to break through the Stoke defence, rounding off an afternoon to forget for the U18s.
HOW WE LINED UP
WHAT IT MEANS
The result sees us fail to close the gap to Blackburn Rovers, leaving five points off the Lancashire side in the U18 Premier League North.
However, we do still remain in second place with a three-point cushion over Manchester United, Middlesbrough and Everton.
Next week, the U18s will divert from league action with a trip to Middlesbrough in the third round of the FA Youth Cup.
The game, taking place in Bishop Auckland, will kick off at 12:30 (UK) on Saturday 11 December.