The young Blues ran riot in the first half to open up a five-goal deficit with Taylor Richards and Nabil Touaizi both grabbing a brace and Benjamin Garre adding the fifth, but the home side improved after the break and hit three to make it a nerve-racking ending.
City, who were without Brahim Diaz, Phil Foden and Joel Latibeaudiere, were rampant in the opening period and went ahead after just seven minutes.
Iker Pozo won the ball back in the home side’s half and fed Richards, who finished with aplomb.
Taking the ball on the half volley, he fired a first time shot across 'keeper, Schaeper, into the bottom left corner.
Pressing high and with an intensity that denied Napoli the time and space required to find their rhythm, a second was inevitable.
It was Touaizi who applied the finish.
Having rounded the ‘keeper, he was forced wide but his quick feet saw him evade Schaeper a second time and slot home from the tightest of angles.
Richards added a third after 25 minutes when Garre, who was tormentor-in-chief in the first half, picked him out with a wonderful cross field pass.
The 16-year-old midfielder steadied himself and curled the ball into the bottom right corner from the edge of the area.
It was all City, but Colin Rosler had to be alert to get a crucial block on Napoli’s only chance of the opening period before Garre made it 4-0.
Coming inside, Touaizi slipped the Argentine in behind his marker and on his favoured left foot there was only going to be one outcome as he calmly picked out the bottom left corner.
He returned the compliment to set the Spanish forward up for the fifth goal.
Some dazzling footwork saw the winger evade his marker and Touaizi planted his six-yard header into the top right corner to complete an outstanding opening 45 minutes.
It was a complete contrast in the second half.
The tempo, which the Italian’s had struggled to live with, dropped and they gained a foothold in the game.
Giuseppe Esposito rose highest at a corner to power a header past Daniel Grimshaw 10 minutes after the break and the early goal galvanised them.
They struck again shortly after as Micheal Scarf caught Rosler out in his own penalty area and slotted home from close range.
It was proving to be a test of Simon Davies’ young side’s resolve and they were indebted to Grimshaw who produced a big save to keep out Gianluca Gaetano after his clever spin and shot.
But they got the third goal their play deserved with 11 minutes remaining as Alessio Zerbin charged into the six yard box to volley Raffaelle Russo’s left wing cross past the helpless Grimshaw.
As the clock ran down it could well have been more nerve-racking for the away side, but there was a maturity to the play which allowed City to take the sting out the game and prevent a frantic finale.
An injury to Diaz forced Davies into one change from the Academy Stadium encounter with the Italians and Richards was the man to replace the Spaniard.
Grimshaw was in goal. Matt Smith moved to right back, with Rosler, Ed Francis and skipper Jacob Davenport alongside him.
Pozo, Tom Dele-Bashiru and Richards were in midfield, with Rabbi Matondo and Garre either side of Touaizi.
What it means
The result means City can't be caught at the top of Group F and have guaranteed their place in the knockout stage of the competition with two games remaining.
Four wins from four gives them 12 points, with Feyenoord in second with five points. The Italian's sit third with four points and Shakhtar Donetsk have one draw on their record.