A Robert Earnshaw hat-trick steered Billy Davies' side to an emphatic 5-1 success, with Leicester-born Paul Anderson and substitute Dele Adebola completing the rout.
Leicester's only consolation was a controversial penalty by Martyn Waghorn.
The victory stretched Forest's unbeaten run to 11 games and, more importantly, lifted them above Nigel Pearson's Foxes in the table.
Forest had taken control of the game in the first half, as Earnshaw demonstrated his predatory instincts.
He netted from the first meaningful attack of the game, in the 12th minute, as he exchanged passes with Dexter Blackstock and rampaged into the box, before providing a composed side-foot finish beyond the keeper and inside the far post.
Paul Anderson should have made it 2-0 after he simply knocked the ball beyond the Leicester defence and out-paced Jack Hobbs to race clear, only for Chris Weale to make a smart save as he darted off his line.
Blackstock then had a header cleared off the line but, when a Chris Cohen shot, from the rebound on the edge of the box, took a kindly deflection, it fell perfectly for Earnshaw, who lifted a second composed finish into the net, this time over the advancing Weale.
By this stage Pearson had made two tactical changes, bringing on Steve Howard and Lloyd Dyer in an attempt to change the course of the game, with the Foxes looking toothless.
But half-time arrived without the visitors mustering a meaningful effort on goal - and it only got worse for them after the break.
It took only four minutes after the restart for Earnshaw to complete his hat-trick, as he latched onto a poor pass from Hobbs, danced beyond last man Wayne Brown and lifted an emphatic left-foot finish high into the net.
On 54 minutes Forest made it 4-0, as Anderson bent a precise shot low into the bottom corner from the edge of the box, following a neat passing move.
Leicester pulled one back courtesy of a rather generous penalty award, given as a Richie Wellens shot struck Blackstock's hand, with Waghorn providing a decisive finish from the spot.
Forest could have had another as two substitutes combined decisively, with Garath McCleary crossing to the far post where Adebola headed over from a good position.
Another McCleary run down the right culminated in a fine ball for Earnshaw, who misfired with a spectacular volley from ten yards.
Leicester produced their first effort on goal from open play in the 75th minute when Matt Oakley went agonisingly close with a driven shot.
But it was Forest that netted again, with McCleary forcing a smart save from Weale with a crisp shot - and Adebola placed the loose ball beyond the stranded keeper in the 77th minute.
Leicester's afternoon was summed up when Oakley fired a shot against the post when presented with a chance of a consolation deep into stoppage time.