Antonio Conte's Blues came from 2-0 down to progress to the next stage with a 4-2 victory thanks to an extra-time Cesc Fabregas double at the King Power Stadium.
Shinji Okazaki had Claudio Ranieri's Premier League champions in cruise control with a neat first-half brace after heading home a bouncing ball over Asmir Begovic in the 17th minute before being played in behind by Andy King and hitting a shot into the ground which again evaded Begovic and Cesar Azpilicueta who was scrambling.
Less than five minutes into the second half, Conte's men had equalised thanks to Azpilicueta's cracking first-time volley from Marcin Wasilewski's defensive header.
The match was stuck at 2-2 until the end of regular time, even after Wasilewski was sent of for a second bookable offence.
The scoreline forced an additional 30 minutes, which brought about some stunning build-up play from the Blues, resulting in a back-heel from Eden Hazard into the path of Fabregas who rifled home in the 92nd minute.
And in the blink of an eye, Chelsea had gone two goals in front when Fabregas lashed home with his left foot after Hazard's cross had not been cleared well enough by the Foxes defence.
Chelsea are now through to the fourth round of the league cup after league winners Leicester conceded four goals for the second time in four outings.
2016/17 EFL Cup - third round
Leicester City (PREM): 2 (Shinji Okazaki 17'/34', red card: Marcin Wasilewski 89')
Chelsea (PREM): 4 (Gary Cahill 45+2', Cesar Azpilicueta 49', Cesc Fabregas 92'/94')
King Power Stadium, Leicester - 29,899