Once again, the champions lost after taking the lead and also ended with just ten men following Fabian Delph’s straight red card late on.
As festive periods go, this has been a miserable one for the Blues who have now slipped seven points behind leaders Liverpool.
City needed a strong start after the weekend loss to Crystal Palace and Pep Guardiola would have been initially delighted by what he saw.
The Blues knocked the ball around confidently and pinned the Foxes back in their own half and when an opening finally presented itself, City took the lead.
Aymeric Laporte stride forward, found Sergio Aguero outside the Foxes’ box, he in turn spotted Bernardo Silva’s clever run and fed the ball to the Portuguese who calmly flicked it past Kapser Schmeichel with 14 minutes played.
It was no more than City deserved at that stage, but the lead lasted just five minutes as a Leicester break saw Jamie Vardy find Marc Albrighton in acres of space in the City box and, just as he did eight days ago, the Foxes winger made no mistake from close range to level the scores.
Yet again, City had been punished by an opposition’s first shot on target.
The Blues resumed control and almost retook the lead twice in the space of 60 seconds as first Leroy Sane crossed for Aguero to put the ball over the bar from six yards out.
Sane then dashed through seconds later only to see his effort blocked.
Leicester were looking dangerous whenever they attacked, and the hosts should have gone ahead when they had three good chances in the space of a few minutes before the break.
First, Bernardo uncharacteristically played a back pass without looking and Vardy was denied by Ederson.
Moments later Hamza Choudhury was left unmarked on the back post – just as Albrighton had been for the equaliser - but couldn’t convert the cross and the ball bounced across goal.
James Maddison then wasted a good chance as City rocked and once again looked vulnerable.
It wasn’t the kind of measured performance we’ve become accustomed to by the Blues who clearly hadn’t shaken off the effects of the Palace defeat.
City continued to stutter along after the break, with the free-flowing football that has become the Blues’ trademark never really igniting.
Raheem Sterling and Sane combined to create a half-chance on 63 minutes but the danger was scrambled clear by the home defence.
The Foxes threatened shortly after with Maddison making an opening for Vardy who was only denied by a well-timed challenge from Aymeric Laporte.
David Silva replaced a tiring De Bruyne just past the hour and immediately was in the thick of the action, playing two threaded balls through to Sane, but neither opening ended in a genuine goal-scoring chance.
You couldn’t help but feel this wasn’t going to be the Blues’ day and eight minutes from time it proved to be the case as Leicester went ahead.
A Foxes corner was headed out by Sane, but only as far as Ricardo Pereira who hit the sort of strike we’re getting used to seeing of late as the right-back fizzed a howitzer of a shot past Ederson from 20 yards.
The champions’ misery was compounded by a straight red card for Fabian Delph in the dying moments, with referee Mike Dean deeming his challenge on Pereira as dangerous.
So, a largely miserable Christmas for City who are clearly out of sorts at present and need to get back to winning ways as soon as possible.
What it means…
City are now third in the Premier League, seven points adrift of leaders Liverpool and a point behind Spurs.
The Blues travel to a revitalised Southampton on Sunday for the final Premier League game of 2018.
Then we kick off the New Year with a huge game against Liverpool at the Etihad – one that the Blues will need to be back to their very best for.