The Foxes boss feels his troops did little wrong at the King Power Stadium on Tuesday, but still found themselves on the wrong end of a 3-1 scoreline.
City had the game sewn up before the hour mark, with Aleksandar Kolarov breaking the deadlock with a spectacular free-kick and Edin Dzeko netting either side of the interval.
Leicester responded well, but ended the evening with just a solitary strike from Lloyd Dyer to show for their efforts as they bowed out at the quarter-final stage.
Premier League quality shone through over the course of 90 minutes, but Pearson believes his side have plenty to be proud about as they return to a promotion push in the Championship.
He told Sky Sports: "We were a little bit disappointed with the fashion in which we conceded the goals, I don't think we were carved open too many times in open play.
"But they are a very, very good side and we were punished for not massive mistakes tonight.
"It's disappointing for us but I think that in the second half, the way we went about it after conceding the third, there are plenty of positive things. But we gave ourselves far too much stuff to do."