The visitors started the first half on the front foot and were totally dominant, winning many as eight corners in the first half-hour. Presentable chances also fell the way of Sadio Mane and Mo Salah inside the opening 15 minutes, but they went begging in a one-sided first half.
Disaster struck for the Reds when James Milner had to be taken off and replaced by Thiago Alcantara, continuing Jurgen Klopp's burgeoning injury woes.
Leicester City grew into the game, and had the best chance of the first half when a routine long ball saw Jamie Vardy run in behind the Liverpool defence. However, the Englishman shot against the bar with only Alisson to beat.
The second half started on a more even footing, with neither side exerting much pressure on the opposition goal.
However, a freekick from 22 yards was well-hit by Trent-Alexander Arnold, but a slight deflection by Vardy in the wall took it onto the post. Liverpool finally got the lead their dominance deserved after Roberto Firmino showed great ingenuity to set up Mo Salah.
The Brazil international controlled the ball excellently in the box before teeing up Salah up with an exquisite backheel. The Egypt international casually stroked the ball into the top corner beyond Kasper Schmeichel's dive to break the deadlock.
With just over 20 minutes to go, there seemed to be only one winner. However, Leicester City had other plans.
A foul by Alcantara on Harvey Barnes saw referee Anthony Taylor point to the spot, but a VAR review deemed that contact had happened just outside the area.
Nevertheless, the freekick still presented a good opportunity for Leicester City; James Maddison made that count by bulging the Liverpool net with a well-taken strike.
Leicester City took the lead less than ninety seconds later. Another long ball led to a miscommunication between Liverpool debutant Ozan Kabak and his goalkeeper Alisson, allowing Jamie Vardy to roll the ball into an empty net.
With Liverpool pushing men forward for an equaliser, they left themselves susceptible to being caught out on the break. The hosts capitalised on the same and made the result safe, thanks to Harvey Barnes.
The victory sees Leicester City move up to second in the Premier League table, as it also marked Brendan Rodgers' first win over Liverpool since 2012.
On that note, here are five talking points from the game.
#5 Liverpool's abysmal run of form continues
Liverpool's emphatic run to the title last season had many tagging them as favourites to retain the Premier League once again this campaign.
As recently as December, they trashed Crystal Palace 7-0, which sent a statement of intent to the rest of the league. However, things have gone downhill from there, as the Reds have recorded just two wins from ten games since that evening at Selhurst Park.
The defending champions have alarmingly spiralled down the league table and could end the weekend a whopping 13 points behind Manchester City, having played a game more.
The Leicester City defeat means Liverpool have conceded three goals in consecutive league games under Jurgen Klopp for the very first time. It also means they have lost three Premier League games in a row for the first time since 2014 when they were under the management of Brendan Rodgers.
This is hardly the title defence anybody expected from the Anfield outfit. Things have to improve quickly for Liverpool, or else they could even miss out on a top-four finish.
#4 Impressive Wilfred Ndidi shows his usefulness at both ends
Since joining Leicester City from Genk in 2017 as N'golo Kante's replacement, Wilfred Ndidi has showcased his usefulness to the team.
The Nigeria international is arguably the best holding midfielder in the Premier League right now, and the Foxes are simply not the same side without him.
Last season, a major reason for Leicester City's faltering end to their campaign was the absence of the 24-year-old. This term, five of their six league losses in the Premier League have come when the combative midfielder has not played.
However, against Liverpool, Wilfred Ndidi made a return to the starting lineup, and once again made a difference. With the visitors threatening to run away with the game in the first half, Wilfred Ndidi proved to be an effective shield for the Leicester City backline.
He weighed in with decisive tackles and interceptions to help launch counterattacks. Wilfred Ndidi also made a game-high five tackles, three interceptions and five clearances, while he also provided the assist for Harvey Barnes' goal.
It was an all-round brilliant performance from the Nigerian, who once again highlighted why he is so highly rated.