Delighted Brighton manager Oscar Garcia, meanwhile, hailed a "massive" result which gives his side a big confidence boost to their play-off hopes.
With promotion confirmed at the weekend, Leicester had set their sights on winning the Championship title but they fell well below the form they had shown throughout the season and Brighton fully deserved the victory that lifted them to seventh in the table, two points behind Reading.
They led 2-0 at half time with headed goals from Stephen Ward in the 17th minute and Jesse Lingard seven minutes later. Both were set up by Dale Stephens with crosses from the left which exposed poor defending by the Foxes.
Leicester substitute Chris Wood hit a post with his first touch of the ball in the second half but it was Brighton striker, Leonardo Ulloa, who added to the hosts embarrassment with two more goals in the second half.
His first came in the 64th minute when he rounded Kasper Schmeichel before slotting the ball into the net and he followed that with a header from Kazenga Lualua's centre in the 79th minute as Brighton became the first team this season to score four goals against Leicester.
Substitute Gary Taylor-Fletcher netted the Foxes only goal of a disappointing night, sweeping home a Lloyd Dyer cross from close range in the 89th minute.
The defeat brought to an end Leicester's 21-match unbeaten run in the Championship, with the last time they had been beaten coming in December - at Brighton.
Pearson said: "It was a very poor performance. Unfortunately tonight we had too many individuals who under performed and collectively we have been very poor.
"The goals we have conceded were very uncharacteristic of us. They were poor goals. But we looked a shadow of what we have been about this season. So it was really disappointing to put on that sort of performance on what should have been an evening where we were celebrating getting promotion. So that's a big wake up for us.
"We didn't perform like the side we have been this season. I thought we were lacklustre and unfortunately unable to get any sort of momentum.
"We have won promotion and we want to win the title. We have five games left and we can't have performances like that."
Brighton boss Garcia said: "This was a massive result for us and I could not be more proud of my players for the way they performed.
"We have been playing pretty well and were wanting to win against a side going into the Premier League. We wanted to come here and play well but we knew it would not be easy against the a team like Leicester. But we were the better team from the start.
"The win has put us in a good position but I only look at the next game and focus on that. I hope the players do the same.
"But to beat the best team in the league gives us a lot of confidence. We are now full of confidence to try and pick up as many points as possible in the remaining games."