The League One side were outclassed by a team a division below them and were unable to cope with the handicap of being reduced to 10 men shortly before half time.
Things had started badly for the visitors who had been forced into an early re-shuffle with their captain Danny Cullip having to leave the field after only 17 minutes to be replaced by Jon-Paul Pittman, with forward Gareth Taylor slotting into a defensive role.
Far from being overawed by their higher division opponents, it was Chester who made most of the running and they were rewarded for their efforts six minutes before the interval, going ahead after being awarded a penalty when Gary Holt upended Ryan Lowe.
In the lead up to the penalty award the Chester striker had seen his superb shot come back off the post and just as he was about to roll the rebound into the net, Holt took is legs from behind.
Referee Lee Mason had no option but to dismiss the defender and Lowe despatched the spot-kick, doubling the punishment for Forest who were left facing the task of playing out the remaining 52 minutes with 10 men.
Forest's hopes of clawing themselves back into the game seemed to be extinguished five minutes after the restart as Chester doubled their advantage.
Lowe beat the offside trap and took his time before coolly slotting the ball past Paul Gerrard for his second of the game.
Five minutes later it was 3-0 as Ben Davies crossed to Marcus Richardson, whose scuffed shot somehow went through the legs of two defenders before nestling in the back of the net.
Defeat was made all the harder to bear for Megson with the visiting faithful calling for the manager's head well in advance of the final whistle.