The defeat means the Foxes are without a league win since the 4-1 victory over West Ham United on the 22nd January and have now lost five Premier League games since the draw against Norwich City in December.
Despite falling to defeat, there were many positives to take ahead of the remaining 10 games.
No goals for Vardy
Jamie Vardy had a golden opportunity to put the hosts ahead after nine minutes when his right-footed strike smashed against the post.
The chance, a traditional Vardy move, came from Youri Tielemans catching Fernandinho out with a through ball behind the Brazilian for the former England striker to latch onto. Similar to his record-breaking goal against Manchester United in 2015, Vardy tried shooting across Ederson, only to be denied by the post.
The Premier League's top-scorer has now not scored since his double against Aston Villa at the start of December, but why?
Vardy had four attempts on Ederson's goal on Saturday evening; three of them being off target and the other being blocked.
The main problem for Leicester and Vardy is the lack of touches that he is receiving. Against Pep Guardiola's team, Vardy only made nine passes. That is one pass every ten minutes.
Earlier in the season, the relationship between Vardy and James Maddison was highly-spoke about. However, in recent games, the former-Norwich City man has failed to create and link-up with his striker.
Against City, Maddison only made two passes to Vardy. The most amount of passes to Vardy from a Leicester player was Dennis Praet, with three.
Despite the fact that Brendan Rodgers' side has only won three league games since the draw to Norwich, Champions League football looks likely. However, the involvement of Vardy will need to intensify if the job is not going to be a hard one.
Three at the back?
With Wilfred Ndidi and Nampalys Mendy already out injured, Leicester were forced into a change in personal and formation ahead of the visit of Manchester City after Hamza Choudhury's red card against Wolves.
Rodgers favoured more towards a back three, with Christian Fuchs slotting into the left-sided centre-back. Did it work?
Fuchs made 43 passes; completing 36 of them. With Leicester's 'playing out from the back' style of play in mind, Fuchs performed well.
If Rodgers does decide to continue the three at the back for the trip to Norwich, Fuchs has shown he is worth the punt as well as Ryan Bennett still awaiting his debut.
Tiredness affected the defence
Manchester City enjoyed 68% possession at the King Power Stadium. They completed 603 passes, whilst Leicester completed only 239. That is expected against a Pep Guardiola's football side. The majority of the Leicester team spent half of their game chasing shadows of the likes of Kevin De Bruyne and Rodri for 90 minutes.
For the goal, when Riyad Mahrez breaks into the Leicester half, Ben Chilwell is seen struggling to keep up with his former teammate. Fuchs is in two minds on whether to press Mahrez or track Jesus's run, whilst Tielemans and Praet are desperate to keep up with the Algerian.
Chilwell's positioning when Jesus receives the ball from Mahrez isn't ideal, especially as he is stood still but before he can be criticized, the England international deserves praise for his efforts.
Facing the pacey Kyle Walker, Chilwell attempted six take-ons; completing three. He made four successful attacking passes and was involved in the attack prior to the City attack.
VAR not to Leicester's rescue this week
Last Friday, VAR saved the Foxes from defeat against Wolves. This week was the opposite.
With the score level, Maddison's free-kick struck De Bruyne's hand and there was no penalty. Later in the first-half, Kelechi Iheanacho was wiped out by Ederson in a 50/50 challenge, that could have been given.
The old chestnut of what could have been, but if either of them penalties were awarded, then the game could be a completely different outcome.