The Ivorian struck deep into injury-time to preserve Leicester's 22-game unbeaten streak after Peter Leven's sparkling double had looked to have given the hosts all three points.
Matty Fryatt notched his 27th goal of the season for the visitors in the sixth minute, but Leven inspired Roberto Di Matteo's men to an impressive comeback before Gradel struck at the death.
The Foxes made the perfect start when Fryatt turned Miguel Llera superbly and coolly slotted past Willy Gueret in the Dons goal, but that galvanised the hosts and Leven's thumping 30-yard drive brought the scores level in the 36th minute.
And MK Dons would have gone in ahead at the break had Matt Oakley not denied Jason Puncheon with an excellent goal-line clearance.
Just after the hour Leven was on the scoresheet again after some fine build-up play put the Scot through for his tenth goal of the season, only for Gradel to break Dons' hearts late on.