Ademola Lookman stunned wasteful Liverpool as Leicester dealt a damaging blow to their title hopes.
The substitute struck to snatch a 1-0 win which ended the Reds' 10-game unbeaten run and was just their second defeat of the season.
Liverpool should have been 2-0 up before then, Mohamed Salah missing his first Premier League penalty in four years and Sadio Mane blowing an excellent second-half chance.
The Foxes made them pay as Jurgen Klopp's second-placed side dropped crucial points in the title race to sit six points behind Manchester City.
Victory breathed fresh life into the Foxes as they rose to ninth and five points off the top six after a difficult December which had seen them win just one of their previous six games and drop out of the Europa League.
They still needed Kasper Schmeichel at his best and the goalkeeper - who kept just his second clean sheet since the opening day - ensured they stayed in the game in the first half to earn revenge for their Carabao Cup defeat last week.
Jordan Henderson had already volleyed over before Wilfred Ndidi's needless trip on Salah in the box presented the forward with the chance of a 16th-minute opener.
Salah had missed just two previous penalties in his Liverpool career but Schmeichel made it three when he threw himself to his right to stop a poor spot-kick.
The Egypt international then nodded a looping ball onto the bar before Leicester cleared. It was Liverpool's first Premier League penalty miss since October 2017, when Salah failed to score against Huddersfield.
The Reds remained in the ascendancy, though, and Schmeichel needed to be alert to keep out Alex Oxlade-Chamberlain's cross after Henderson just failed to connect.
Leicester had managed to contain their visitors but continued to rely on Schmeichel, the Denmark international brilliantly denying Salah after 32 minutes following Ndidi and Luke Thomas' mix-up.
It kept Leicester level and they reminded Liverpool of their own threat when the previously quiet Jamie Vardy forced Joel Matip to block after Timothy Castagne's cute flick.
It upped the ante for the Foxes and Liverpool lost the degree of control they had enjoyed for the majority of the match.
Even so, Henderson whistled a strike over just before the break and Diogo Jota's snatched volley dropped wide as they pushed for an opener.
The second half started much like the first, with Liverpool camped on the edge of Leicester's area but unable to break down their stubborn resistance.
The Foxes remained dangerous on the break, though, and only an excellent interception from Kostas Tsimikas stopped Vardy reaching Kiernan Dewsbury-Hall's centre.
But the Reds were still on top and Mane should have finally fired them ahead when he latched onto Jota's through-ball.
He had Castagne for company but still just had Schmeichel to beat yet lifted over the bar.
It proved crucial as ex-Everton winger Lookman grabbed the winner on 59 minutes - 178 seconds after coming off the bench.
The forward had replaced Hamza Choudhury and he linked up with Dewsbury-Hall to evade Matip's challenge and drill past Alisson from 12 yards.
Liverpool pushed for a late leveller which never came as Jota headed a corner wide with nine minutes left while Schmeichel kept out Virgil Van Dijk at the near post.