Bolton were twice in the lead but goals from Danny Drinkwater, Anthony Knockaert, an own goal from Matt Mills and second-half strikes from Lloyd Dyer and Gary Taylor-Fletcher gave the Foxes a 5-3 victory and their 15th win of the season.
Andre Moritz bagged two goals for Bolton and Jermaine Beckford the other in a remarkable match.
Leicester were again unchanged after the Boxing Day win over Reading that took them to the top of the table. Bolton were forced into a defensive change with Alex Baptise replacing Kevin McNaughton who has gone back to Cardiff after his loan spell.
And in an amazing first half the two sides shared six goals with a mixture of exciting attacking and sloppy defending. Leicester struck first in the fifth minute after making a blistering start to the game.
The sustained pressure brought its reward when Drinkwater pounced on a poor clearance to crash a 20-yard shot into the far corner of the net off the inside of a post.
But if the Foxes thought they were in for an easy ride they were quickly brought down to earth when Bolton hit back to turn things round with two goals in five minutes. The equaliser came in the 15th minute with Chung-Yong Lee breaking down the right to provide a low cross that was poked in by Andre Moritz for his third goal in the last four games.
Worse followed for the Foxes with their former player Beckford allowed too much time and space to pick his spot with a left shot beyond the diving Kasper Schmeichel, his seventh goal of the season.
The game continued to be fast and open and both mangers would be concerned about how easily their defences were being breached. Drinkwater fired well wide from 20 yards before Mohamed Kamara tested Schmeichel from fully 30 yards out.
But more goals always looked likely and sure enough one arrived in the 37th minute - to Leicester. Matty James sent Lloyd Dyer away down the left and winger picked out Knockaert at the far post who scored with a well-placed header.
Incredibly Bolton took the lead again two minutes later. The City defence were once more guilty of not closing down and this time Moritz punished them with a fierce low shot into the bottom corner. An angry Schmeichel berated his colleagues for their slackness.
But Leicester capped a remarkable half with an equaliser four minutes before the break, coming in the form of a bizarre own goal from another of their former players, Mills. A shot from Paul Konchesky was cleared by Tim Ream but the ball struck Mills on the head and flew back into the net.
City made a strong start to the second-half but Bolton were looking tighter in defence.
It took until the 65th minute for Leicester to carve out a decent chance, with a free-kick from Knockaert coming back off the bar but Liam Moore prodded the rebound wide. At the other end Schmeichel pulled off a great reflex save to deny substitute Mark Davies.
Then in the 73rd minute David Nugent, having scored with eight out of nine penalties this season, saw Andy Lonergan save his spot kick after the goalkeeper had brought down Vardy.
But two minutes later Dyer scored a sensational solo goal to put the Foxes ahead. He raced away from just inside the Bolton half, cut into the penalty area and buried a shot into the far corner.
And in the 89th minute substitute Taylor-Fletcher confirmed victory with a neat finish after a flick on by Andy King.