Leicester reached the Carling Cup third round after scoring twice late on.
Forest were given a "free goal" after 23 seconds to compensate for the 1-0 lead they lost when the initial tie was abandoned when Clive Clarke collapsed.
But Alan Sheehan equalised with a classy free-kick before Nathan Tyson's neat finish restored Forest's lead.
With two minutes left substitute Richard Stearman levelled and then, with extra time looming, Stephen Clemence hit the stoppage-time winner.
Nottm Forest: Smith, Chambers, Wilson, Morgan, Bennett, Clingan, Lennon (Perch 76), Cohen, Tyson (Holt 86), Agogo, Commons.
Subs Not Used: Roberts, Breckin, Sinclair.
Goals: Smith 1, Tyson 64.
Leicester: Fulop, N'Gotty (Stearman 73), Kisnorbo, McAuley, Sheehan, Hume, Clemence, Wesolowski (Chambers 19), Mattock, Campbell (Fryatt 61), De Vries.
Subs Not Used: Henderson, Marco Ferreira.
Booked: Chambers, Kisnorbo.
Goals: Sheehan 31, Stearman 88, Clemence 90.
Ref: Graham Salisbury (Lancashire).