Leicester City 1 Crystal Palace 2
Damien Delaney put the Eagles in front midway through the first-half after Kasper Schmeichel had spilled a high ball in the penalty area, before Peter Ramage doubled the visitors` lead five minutes later with a header from a corner.
Andy King pulled a goal back in second-half stoppage time, but it was not enough to prevent Leicester`s 100 per cent home record coming to an end.
The loss sees Nigel Pearson`s side slip to second in the Championship, following Cardiff City`s 4-0 victory over Burnley.
Crystal Palace looked the more organised side, especially in midfield, and could have gone ahead in the first minute when Dean Murray found space at the back post, but the striker dragged his shot across goal.
At the other end, Lloyd Dyer picked out Jamie Vardy down the left-hand side with a clever ball over the top, and while the former Fleetwood Town striker did well to pull the ball back into the penalty area, David Nugent`s shot was directly into the path of Palace goalkeeper Julian Speroni.
Andy King and Anthony Knockaert then had attempts which failed to trouble Speroni, while Wilfred Zaha`s speed and ability started to cause problems for the Leicester backline.
Palace were ahead half-way through the first period when Mile Jedinak`s corner-kick was spilled by Kasper Schmeichel, and although it looked like the Dane may have been impeded when collecting the ball, he could do nothing about Damien Delany`s powerful finish from ten yards.
The visitors looked the better side after the goal, and almost doubled their advantage when Zaha`s strike from 25 yards hit the outside netting of the Leicester goal.
The Foxes were 2-0 down soon afterwards when Peter Ramage headed past Schmeichel from Yannick Bolasie`s corner.
The goal capped a six-minute period which would have left Nigel Pearson fuming on the touchline, especially with the way both goals were conceded from set pieces.
Leicester nearly pulled a goal back five minutes before half-time, but David Nugent`s close-range effort was somehow cleared off the line by the Crystal Palace defence.
Andy King then forced a brilliant save from Julian Speroni with a fine curling strike from just inside the penalty area, which might have given the Foxes a route back into the game before the break.
Leicester did improve in the second-half and should have gone ahead before the hour mark when Wes Morgan`s header across goal picked out Jamie Vardy, but his effort failed to test Speroni as it sailed over the crossbar.
As Leicester pushed forward in numbers, they were left vulnerable in defence and could have fallen further behind if it wasn`t for a strong last-ditch challenge by Morgan on Wilfred Zaha.
The Foxes were denied a possible penalty when David Nugent`s header was cleared off the line by Owen Garvan, and although the Leicester players shouted for handball, no spot kick was awarded and Palace were able to clear their lines.
Leicester did got on the score sheet in second-half stoppage time when Andy King headed past Speroni from Paul Konchesky`s cross, but it proved to be nothing more than a consolation as the Foxes fell to their first Championship home defeat of the season.