Wolves punished an abject start from their visitors, with Jota and Ryan Bennett making it 2-0 inside 12 minutes.
Kasper Schmeichel saved from Jota and Raul Jimenez to limit the damage and Demarai Gray's solo effort hauled Leicester back into it early in the second half.
Harvey Barnes' deflected 51st-minute attempt gave Conor Coady the unfortunate distinction of picking up a second own goal in the space of six days.
Wes Morgan thought he had grabbed a point three minutes from time but, having been caught out by Ruben Neves' brilliant pass for Jota's 64th-minute second, Leicester's captain saw the Portugal midfielder release Raul Jimenez to tee up the winner and spark bedlam.
Leicester's complete failure to close down Neves resulted in Schmeichel making a fabulous save from the Portugal midfielder's 25-yarder but their early lethargy was soon punished.
Gray clumsily gave away possession and Jota caught Danny Simpson napping to convert Joao Moutinho's brilliant cross from the right.
To compound the Foxes' early woes, Harry Maguire jarred his knee and – still seemingly feeling the effects – Bennett rose above the England centre-back to power home Moutinho's corner.
Within two minutes of the restart the deficit was halved as Jamie Vardy got the better of Bennett to feed Gray, who skipped past Romain Saiss' lunging challenge and finished clinically.
Patricio pushed a firm strike from Barnes over as his backline wobbled but could do nothing as the returning loanee's shot flew in off Coady.
Following a close shave in the 61st-minute, Neves brilliantly undid Morgan for Jota to fire in via Schmeichel's legs.
Morgan looked to have salvaged a torrid outing on the end of James Maddison's free-kick – the substitute having missed a glorious 82nd-minute chance from close range.
But under-fire Foxes boss Puel was left crestfallen on the touchline as opposite number Nuno Espirito Santo charged on to the field to join in with Jota's celebrations and was sent off for his involvement.
What does it mean? Wolves stake claim to be best-of-the-rest and leave Puel on notice
Manchester United's return to form under Ole Gunnar Solskjaer means the "big six" have pulled collectively away from the pack. Wolves' scintillating win means they leapfrog Leicester to go eighth – only behind Watford on goal difference. The Foxes' battling qualities after the break showed Puel probably still has the dressing room on side, but a third consecutive defeat across all competitions will have done little to quell his critics at the King Power Stadium.
Jota deservedly hits the goal trail
The only ingredient missing from Jota's effervescent forward play this season has been a relatively key one – goals. The 22-year-old's intelligent movement, deft link play and relentless work rate had only yielded two in 18 Premier League appearances before Leicester arrived at Molineux. If he can turn this treble into a streak he will become a fearsome prospect that no defence in the top flight will relish coming up against.
The moment Diogo puts us ahead! pic.twitter.com/xRFVYeQgsn— Wolves (@Wolves) January 19, 2019
Title heroes Morgan and Simpson on the decline
Simpson and Morgan made up half of the Leicester back four that incredibly claimed the Premier League title in 2015-16. Those days seemed a lifetime ago as the duo were at once run ragged by Wolves' ravenous frontline and caught out by Moutinho and Neves' superb passing range from midfield. The fact Leicester's captain found the net and his obvious popularity should not be allowed to mask shortcomings, although Jonny Evans' wretched display as a second-half replacement for Maguire shows Puel might not have a quick fix within his squad.
Key Opta facts
- Wolves were two goals up at half-time for only the fourth time in the Premier League, winning all four of those games.
- Wolves have netted three 90+ minute winners in the Premier League this season, more than any other side.
- Diogo Jota is the first Wolves player to score a top-flight hat-trick since John Richards in October 1977, also against Leicester. He also became the second Portuguese player to score a Premier League hat-trick after Cristiano Ronaldo.
- Leicester goalkeeper Kasper Schmeichel conceded his 200th goal in the Premier League in his 156th game in the competition (now 202 goals). It took his father Peter Schmeichel 241 games to hit the 200 goals conceded mark in the English top-flight.
Newport County's upset win in the FA Cup means Leicester have next weekend off and 11 days to contemplate a trip to Premier League leaders Liverpool. Wolves knocked the Reds out of the cup and face Shrewsbury Town in round four.