A 25th-minute goal from Craig Bellamy sent the Foxes crashing to defeat and put a dent in their promotion hopes. They are now 10 points behind Cardiff.
The Foxes dominated the first half but found themselves behind when Bellamy produced a clinical finish to volley home Craig Conway's cross.
The goal was against the run of play, with Andy King and Jamie Vardy both hitting the bar and goalkeeper David Marshall producing a superb save to keep out a header from Wes Morgan.
Cardiff continued to deny the Foxes in the second half and Conway was in the right place to clear David Nugent's header off the line. It was the first time this season that Leicester had failed to score at home.
"When you create as many goalscoring opportunities as we did you would expect to score," said Pearson. "But we came up against a side that, to be fair to them, defended well and had a lot of experience.
"They hit us with a sucker punch and in the second half it fizzled out a little bit. It was a frustrating day.
"We didn't manage the ball as well as I would have liked but you have to give them a bit of credit. They got everyone behind the ball and tried to hit us on the break.
"But we deserved to get to something out of the game. Scoring goals obviously is the key factor to winning games but I would be more concerned if we were not creating chances.
"We are putting together a promotion push but things have not gone our way in the last few weeks. What we must do is keep in contact with the sides in the automatic places. I might go for a striker in the January transfer window if the right one is available."