Blackpool took a shock lead but their interim player-manager, Barry Ferguson, said his men felt "sorry for themselves" and fell away after Leicester equalised.
The Foxes dominated the first half, but for once, failed to make their superiority count, and found themselves a goal down at half-time.
Jamie Vardy missed two gilt-edged chances and Blackpool made City pay by snatching the lead in the 41st minute through David Goodwillie.
But City showed why they are leading the Championship table, producing a superb second-half performance that brought them three goals for the fourth game in a row.
The outstanding Riyad Mahrez scored the first with a stunning strike from 20 yards in the 60th minute, and then laid on the second for Wes Morgan with a lovely cross to the far post after 82 minutes. And to complete another excellent day Kevin Phillips lashed home the third goal.
The victory extended City's unbeaten run to 16 games that includes 13 wins and three draws. It was Blackpool's 10th defeat in their last 11 away games.
Pearson said: "We played against a side who didn't try to win the game and we had to show a lot of patience. I would have done the same if I had been them and it made it a potentially difficult day for us.
"I think the key thing today was that the players showed a belief in how we play and trusted each other to play with our methods and we got the result we wanted. But it was more difficult than in previous games because we didn't get that early goal and, as we have done on a few occasions, had to win from a losing position.
"But it was a great result for us. It's another game ticked off and another win. Every time we do that it makes it more difficult for sides around us. We showed an awful lot of quality today. The players have got a lot of belief in themselves and each other."
Ferguson said: "Leicester are a good team but I set out a game plan that had worked for 60 minutes. Then they scored a great goal and we felt sorry for ourselves and fell away, and in the end Leicester deserved the win.
"That's been the problem for us all season. We had a good result against Millwall in midweek, but it had been a long time coming. And we did well again for 60 minutes today until the lad (Mahrez) fires a great goal and after that we sat far too deep and invited Leicester on to us.
"You have got to deal with pressure in professional football. I have always been able to deal with it and I would like to think the boys in the dressing room can. We have been through a hard time since I took over.
"I have been trying my hardest since I came in and at times I have thought we were getting there and then I have been knocked down again. But it is getting closer and closer to the end of the season and we have got to be able to handle the pressure because we are still a million miles away from being safe."