City saw their lead at the top of the table cut after losing out at Heath Hayes.
Ivor Green’s men suffered just their second league defeat of the season as Leicester Road closed the gap to four points with three games in hand.
Heath Hayes signalled their intentions early on with a strike bouncing away to safety off the post.
It was then the turn of the crossbar to come to City’s rescue as the hosts looked to find a breakthrough.
Joe Obi went close for Lichfield with a header well saved.
But it was Heath Hayes who made the breakthrough when a City corner came to nothing and the hosts quickly broke to engineer a two on two – and they made this opportunity count.
Lichfield’s afternoon went from bad to worse when a defensive error allowed the home side to double their advantage.
The second period needed an improvement – and the half-time words clearly had an impact as the visitors pulled a goal back when a long ball forward found the head of Matt Gardner who nodded beyond the advancing keeper.
Obi and Josh Mansell both sent efforts over the bar as Lichfield looked to find a leveller.
The game began to become an end-to-end contest with the two sides carving out chances, with penalty appeals also waved away in both areas.
Jamie Elkes saw his effort cleared off the line as City went close to clawing the scores back level.
But another defensive error proved costly at the other end as Heath Hayes made it 3-2.
Kyle Patterson pulled a goal back for City but it wasn’t enough as the home side held on for all three points.