The Sky Blues slipped to defeat at Meadow Lane thanks to two first half Notts County goals and a late penalty.
Manager Steven Pressley named an unchanged starting 11 to that which won at Bristol City on Tuesday night but City were two down after just 33 minutes as Hayden Mullins and Jimmy Spencer were on target.
Alan Sheehan sealed the win for the home team from the spot after Blair Adams upended Jamal Campbell-Ryce late on.
There was an early opportunity for the Sky Blues, who were being cheered on by close to 4,000 fans, when Adam Barton won the ball in midfield.
That set Nathan Delfounseo clear but his shot flew wide after three minutes.
At the other end, Callum McGregor curled a free-kick over the bar as the home side got a foot-hold in the game.
Jamal Campbell-Ryce was a constant threat and his 12th minute cross was met by Hayden Mullins, who headed past Joe Murphy to give Notts County the lead.
It could have been 2-0 in the 24th minute but City keeper Murphy saved from Alan Sheehan and then Manny Smith.
But Notts County did double their lead in the 33rd minute when Jimmy Spencer shot from distance and, although Murhpy got a hand to it, he couldn't stop it finding the top corner.
Then, with two minutes remaining before half-time, McGregor went close but was just off target.
Pressley wasted no time in changing his side. He sent on John Fleck and Dylan McGeough for Barton and Billy Daniels straight after half-time.
City were slightly more imposing in the opening 20 minutes of the second half, without really creating a chance of any note.
Cyrus Christie was looking lively down the right and he fired in a couple of dangerous crosses which County managed to clear.
The Sky Blues fashioned a 65th minute shooting chance for Carl Baker but the skipper struck his effort wide of the post.
Smith went close again for the home side when he got to Campbell-Ryce's cross at the back post but headed over.
Campbell-Ryce won his side a penalty in the 87th minute as he went down under a challenge from Adams and Sheehan sent Murphy the wrong way from the spot.