Louis van Gaal slammed his Manchester United players after they surrendered a two-goal lead in a remarkable collapse at the King Power Stadium.
The Dutchman said United had thrown the game away as they slipped to their second defeat in five Premier League matches under him.
"A lot of players lost their heads," he said. "Then, anything is possible. We gave it away. They didn't have to create a lot of chances - no, we gave it away."
United had looked on course for a comfortable victory when leading 3-1 after an hour, but they fell apart as Leicester City claimed their first home victory since returning to the Premier League.
"Of course I am very happy with the first half and the first 15 minutes of the second half but you cannot give this game away in this manner like we have done," van Gaal added. "When you play for Manchester United this is not possible."
Van Gaal said such a collapse had happened to him only once before in his career - in January 1998 in his first season at Barcelona, when they conceded four goals in the final 21 minutes at home to Valencia to lose 4-3.
"I have been 25 years in this profession and I have had another experience like that with Barcelona; we were three goals up and we lost 3-4. That was also with a top club, but you never expect that when you are 3-1 ahead, for the second time two goals ahead. You have to kill the game, and you have to keep possession but we could not do that, and then of course we gave it away with penalties.
"We created a lot of chances and we made superb goals but you have to do it 90 minutes and not 60 minutes and you have seen that it was not enough."
Van Gaal, who saw Jonny Evans leave the stadium on crutches after he limped off in the first half with an ankle injury, admitted his new signings will take time to get up to speed in the Premier League.
Radamel Falcao lasted 72 minutes on his full debut before making way for Adnan Januzaj while Angel Di Maria made way for Juan Mata four minutes later.
"I have changed Falcao not because he was bad, he played very well, but I have to build them up, that is my problem," van Gaal said. "I have to build players up during the season but he played well in my opinion. Di Maria had a problem in the last 15 minutes."
He refused to point the finger at individual players but said the result was down to the "weakness of our defensive organisation". Van Gaal added: "They shot five times on the goal [and] these five goals happened because we made errors in ball possession.
"I think the spectators have seen a fantastic spectacle today and we started well and scored fantastic goals.
"But you have to win the game and we didn't do that. We didn't keep ball possession in the right way.
"We have too many players who want to seek for the goal. Leicester have already showed against Arsenal and Stoke that they can come back and they did it very well."
Leicester manager Nigel Pearson hailed his team's powers of recovery. "When you're 3-1 down against Man United, to win the game, regardless of how people view where they are at the moment, is an outstanding result for us."
He had special praise for Jamie Vardy, a striker he first saw playing for Stocksbridge Park Steels, and who this week three years ago was playing for Fleetwood against Kidderminster in the Conference.
The 27-year-old scored one goal and had a hand in the other four and Pearson said: "His strengths are his aggression and his pace and today he showed a lot of composure with his finishing. From playing for Stocksbridge and going to Halifax and Fleetwood, he is a success story and I am very pleased for him."