The stalemate leaves Leicester second in the table behind the Gunners on goal difference, completing an amazing turnaround from 12 months ago when the Foxes were bottom of the standings.
After defeat at Anfield on Boxing Day, some questioned the title credentials of Claudio Ranieri's team but they silenced their critics with another superb performance on Tuesday night as they more than held their own against many people's favourites for the crown.
City stay third and without an away win in the league in six outings since a 1-0 victory at Crystal Palace on September 12.
The two teams had cancelled each other out, and Leicester had marshalled the threat of Raheem Sterling well, until the 18th minute
It was then that Sterling caught Bacary Sagna's ball over the top into space and teed-up Kevin De Bruyne, whose first-time shot from the edge of the area was parried away by Kasper Schmeichel
It signalled the start of an assertive spell from City, only briefly interrupted when Aleksandar Kolarov got himself in a tangle and Riyad Mahrez curled a shot narrowly over the crossbar.
City got in down the right again before the half-hour mark following good link up play between Sagna and De Bruyne
Sterling took a pass on his chest and, losing his balance, hit a volley but Schmeichel got a hand on the ball and it spun past the far post.
Sterling threatened again in the 32ndminute when Schmeichel had to help his left-foot shot from the edge of the box over the crossbar.
Leicester survived the spell of pressure unscathed and finished the first half strongly
Christian Fuchs turned away from De Bruyne and delivered a beautiful cross from the left which just eluded Jamie Vardy and Marc Albrighton in the six-yard box.
Four minutes before half-time Vardy was presented with a glorious chance to score - an opportunity he has buried many times already this season
Fernandinho dallied and lost possession 30 yards out, allowing Danny Drinkwater to put Vardy clear on goal but the Premier League's top scorer uncharacteristically blazed his shot over the crossbar.
There was more ebb and flow about the second half as chances went begging at both ends.
Sergio Aguero flicked a near-post effort just wide straight after the restart before N'Golo Kante soon had Joe Hart worried with a dipping 25-yard shot.
Albrighton scuffed his shot wide from a good position inside the penalty area while back at the other end Schmeichel had to push away a Nicolas Otamendi header.
A brilliant pass from Drinkwater gave Vardy anoth er sight of goal but his shot was straight at Hart, who then did well to repel a powerfully-struck Fuchs free-kick in the 76th minute
Both sides had spells of late pressure but neither could make the breakthrough and a draw was a fair result
TWEET OF THE MATCH
"Come on you Foxes!" - Former Leicester striker Gary Lineker (@GaryLineker) urges his home town club on but had to settle for a goalless draw.
PLAYER RATINGS
LEICESTER
Kasper Schmeichel: 9
Danny Simpson: 6
Wes Morgan: 8
Robert Huth: 8
Christian Fuchs: 7
Riyad Mahrez: 7
Gokhan Inler: 6
N'Golo Kante: 7
Danny Drinkwater: 7
Marc Albrighton: 7
Jamie Vardy: 7
Substitutes:
Leonardo Ulloa: 5
Andy King: 6
Ritchie De Laet: 3
MANCHESTER CITY
Joe Hart: 7
Bacary Sagna: 7
Eliaquim Mangala: 8
Nicolas Otamendi: 7
Aleksandar Kolarov: 6
Fernandinho: 6
Yaya Toure: 6
Kevin De Bruyne: 8
David Silva: 7
Raheem Sterling: 8
Sergio Aguero: 5
Substitutes:
Wilfried Bony: 6
Jesus Navas: 6
Kelechi Iheanacho: 4
STAR MAN
Kasper Schmeichel - made three good saves to deny De Bruyne, Sterling and Otamendi and make sure his team took a deserved point
Organised his back line well too.
MOMENT OF THE MATCH
Following good link up play between Sagna and De Bruyne, Sterling took a pass on his chest and, losing his balance, hit a volley but Schmeichel got a hand on the ball and it spun past the far post
Brilliant save.
VIEW FROM THE BENCH
Claudio Ranieri seemed to get his tactics right in midfield with the surprise introduction of Inler alongside regulars Drinkwater and Kante nullifying the threat and effectiveness of the likes of Fernandinho, Silva and Toure.
MOAN OF THE MATCH
Otamendi fell to the ground as if taking a right hook from Anthony Joshua in injury time when Huth's arm brushed against his face as City prepared to defend a late free-kick
Get up!
WHO'S UP NEXT?
Leicester v Bournemouth (Barclays Premier League, Saturday January 2)
Watford v Manchester City (Barclays Premier League, Saturday January 2)
Source : PA
Source: PA