Gerry Taggart described this game as "the most important in the club's history'' and the Foxes responded to the assistant caretaker manager's rallying cry with a magnificent first-half display.
But it was Barnsley's top-scorer and captain Brian Howard who missed chances early on when glanced a free header wide before driving a 20-yard free-kick straight at Marton Fulop.
However, it was City who broke the deadlock on 22 minutes with a close-range strike from Collins John in his first start since arriving on a three-month loan from Premier League Fulham.
Patrick Kisnorbo got a head to a Shaun Newton free-kick and John reacted quickest to bundle home the loose ball.
Leicester doubled their lead on the half-hour mark when Kisnorbo turned poacher to score with a powerful downward header from Alan Sheehan's corner.
Moments later the rampant Foxes almost made it three when John flashed a header just wide after Newton's surging run and cross.
Fulop was forced to beat away Kayode Odejayi's drive with Kisnorbo deflecting Steve Foster's follow-up shot for a corner.
City's sparkle was dimmed after the restart as Barnsley strove to reduce the deficit.
Although the Tykes dominated the second half, they were kept at bay by a City defence superbly marshalled by man-of-the-match Kisnorbo.
In the dying moments, Leicester almost scored a third when first Matty Fryatt floated a shot just over the angle of bar and post before he turned his marker to extract a sprawling save from Heinz Muller.