Fatawu's brilliant finish lit up a game of precious few chances, as these two Midlands rivals slugged it out under the lights at the KP Stadium.
Chris Davies' side, who came into the contest unbeaten in the second tier, improved as the contest between two of the league's most fancied clubs wore on.
But with Jay Stansfield ruled out, they struggled to create enough to trouble Marti Cifuentes' men, before Leicester's substitute pounced following 16-year-old Jeremy Monga's memorable assist.
Both teams began the match in encouraging form, taking maximum points from their most recent outings in a competition famed for being predictably unpredictable.
A shock midweek Carabao Cup defeat by Port Vale appeared to have dented Birmingham's confidence early on, however, although Davies' players applied the same suffocating press so beloved of his mentor Brendan Rodgers.
There was a league debut for Lewis Koumas, following his loan move from Liverpool, but the absence of attacking talisman Stansfield through injury did not prompt a tactical change of plan, with Leicester being harried whenever they were in possession. Thanks to the style Cifuentes wants to implement, that was for the most part of the opening exchanges.
Survival was the Spaniard's primary ambition whilst in charge at QPR. Having succeeded Ruud van Nistelrooy following Leicester's slide into the second tier, it is now about revival.
With only eight minutes gone, Fatawu rifled home the opener. Some hesitant defending from Ethan Laird caused confusion in Birmingham's rearguard, in turn allowing teenager Louis Page to slip the ball to the Ghana international, who casually cut inside before smashing it into the top corner of the net.
Birmingham finally began to build some rhythm midway through the first half but they still struggled to properly test a rearguard marshalled by Jannick Vestergaard.
If the visitors have a weakness, it is failing to create the number of clearcut opportunities Davies would like.
One appeared to have presented itself midway through the first half when the ball fell kindly at Tomoki Iwata's feet on the edge of the box. But rather than shoot, the Japanese midfielder elected to try and pass instead. It was a moment which summed-up their work following Fatawu's intervention - plenty of promise but very little threat.
What Birmingham had not shed, however, was their hesitancy. Immediately after the restart, Christoph Klarer was forced to recover from an untimely slip to prevent Jordan Ayew a clear run at goalkeeper Ryan Allsop.
The visitors improved as the night wore on but Pereira made the points safe in the 88th minute, after profiting from fine work by fellow substitute Monga.
The win, Leicester's third in four matches, lifts them to third in the table, while Birmingham lie seventh.