The hosts made a flying start and Osman gave them the lead inside three minutes when he robbed Ricardo Pereira and squeezed the ball past recalled Leicester goalkeeper Asmir Begovic.
But Leicester refused to lie down and Birmingham goalkeeper James Beadle made a smart save to deny De Cordova-Reid.
Birmingham did not heed the warning and Foxes top scorer Fatawu levelled on 21 minutes with his seventh of the season. Paik Seung-Ho’s headed clearance fell to Fatawu who controlled the ball before lashing home on the half-volley.
But the Foxes were down to 10 men when De Cordova-Reid was sent off for a dangerous studs-up challenge which caught Osman on the ankle.
Birmingham piled on the pressure, amassing 22 shots, including six on target. Osman and Marvin Ducksch both missed, while Begovic denied Paik and Jhon Solis.
But the Foxes were finally beaten in the 67th minute when Ducksch found Stansfield with a slide-rule pass and he produced an excellent, angled finish to end his 13-game barren run.