Two goals in the opening sixteen minutes were enough for the Reds youngsters to progress at the City Ground against a Manchester City side containing players from home and abroad.
The visitors pulled one back in the second half but were unable to prevent a memorable result for Forest.
Academy director Nick Marshall had said earlier in the day that City would provide a huge test but had also talked about the quality of the Reds youth set-up and both he and coach Eoin Jess will be delighted with the outcome of Wednesday night's game.