The visitors failed to capitalise on the sending-off of Blues midfielder Craig Gardner.
Gardner was sent off after only 29 minutes for two bookable offences and faces a two-game ban as it was his second dismissal of the campaign.
But Blues held on for a point in their own battle for survival, with Sebastian Larsson cancelling out Steven Fletcher's early penalty.
Alex McLeish's side are now four points clear of the relegation zone with three matches to play.
But Wolves will view this as a golden opportunity wasted to climb out of the bottom three, having had the numerical advantage for such a lengthy period.
Winger Matt Jarvis and striker Fletcher caused problems in the early stages of the game.
But after the sending-off there were precious few chances, with Blues showing typical resilience to secure a point.
The visitors made a positive start and Kevin Foley had a shot blocked inside the box by Roger Johnson following a deep Jarvis cross.
After six minutes Wolves went ahead through Fletcher's penalty.
Ben Foster's poor clearance fell straight to Jarvis, who played in Stephen Ward. Foster came off his line but only succeeded in bringing down the Wolves player and referee Kevin Friend pointed to the spot.
Foster was booked before being sent the wrong way by Fletcher for his ninth goal of the season.
Gardner was then brought down by Jamie O'Hara and the two were cautioned after squaring up to each other.
The tackles were flying in thick and fast and Gardner was on the receiving end of a crude challenge by Richard Stearman on the edge of the Wolves area which did not receive a booking.
Larsson delivered the free-kick and it crashed against the crossbar with Wolves keeper Wayne Hennessey well beaten.
A mistake by Michael Mancienne gifted Birmingham their equaliser after 27 minutes.
The on-loan Chelsea player failed to make a clean header when trying to dealing with a long Foster clearance.
The ball dropped into the path of Larsson, who drilled his low shot past Hennessey.
But two minutes later Birmingham were reduced to 10 men.
Referee Friend adjudged that Gardner had dived when challenged by Jody Craddock and he was sent off for a second bookable offence.
McLeish responded to the Gardner dismissal by reorganising his side. He took off Kevin Phillips to leave Cameron Jerome as the lone striker and brought on winger Jean Beausejour to reinforce the midfield.
There was no quarter being given and Craddock was yellow-carded for hauling down Jerome in full flight.
Foley would have been disappointed not to hit the target after Ward teed up a chance following a dangerous centre from Jarvis.
Mick McCarthy was forced into a half-time switch with the injured Stearman replaced by Adam Hammill.
Foster soon came racing out of his area to block an effort from Hammill near the touchline.
Wolves skipper Karl Henry became the first player to be booked in the second period for chopping down Lee Bowyer.
Foley brought down Beausejour just outside the Wolves area but Larsson could not keep his free-kick down.
A mistake by Bowyer let in Jarvis but he sliced his shot well wide in his last taste of the action before being replaced by Stephen Hunt.
Foster then got his body behind a low drive from O'Hara.
Wolves continued to search for the winner and Hammill had a shot blocked by Blues skipper Stephen Carr, but there was no way through.