Fryatt, a £750,000 buy from Walsall, was the matchwinner in a tie in which more illustrious players failed to shine.
It was the first time since 2001 that Leicester have beaten Villa and it was sweet revenge for the 3-2 defeat suffered in the same round last season.
The honours for the Foxes' surprise success go to Fryatt and Leicester's resolute defence which refused to capitulate under persistent pressure.
The defeat was a bitter pill for Villa manager Martin O'Neill, who saw his side lose at Villa Park for only the third time since last March.
O'Neill must have regretted taking the opportunity to make six changes in his side to meet his old club but the new-look line-up simply failed to light the fuse.
In a frustrating goalless first half neither side possessed the finishing touch to bring the tie alive.
Iain Hume had a header which went over the bar for Leicester, while Marton Fulop denied Shaun Maloney when he flicked the Scotsman's drive over the bar.
Generally, Villa's defence was solid. Curtis Davies made his home debut following his move from nearby West Bromwich Albion and never put a foot wrong.
Leicester, meanwhile, grafted hard and the lowly Championship side played much better than their current league position suggests.
But the lack of goals produced an air of complacency from Villa and their play lacked real urgency.
Gabby Agbonlahor had several good runs in the first half but Marlon Harewood, who had previously only played for 22 minutes as a substitute, could not take advantage of a golden opportunity to shine against lower class opposition.
City were content to play a defensive game with Bruno N'Gotty and Gareth McAuley, ably supported by Patrick Kisnorbo, effectively shutting out the Villa attack.
The waiting tactics of Villa eventually turned to frustration but the lack of urgency still persisted despite the Premiership side camping in Leicester's half of the field for most of the second period.
The introduction of the talented Ashley Young for up and coming Isaiah Osbourne gave Villa a little more flair but a dogged Leicester resolutely refused to surrender.
Villa ultimately paid the penalty when Fryatt collected a long pass from James Chambers and coolly slotted home a low angled shot past Stuart Taylor in the 74th minute.