Brakes have been paid a nominal fee for Blyth, who will join City’s development squad under the guidance of coach Steve Beaglehole.
A sell-on clause is also included in the deal, with the prospect of a Leicester City side coming down to the New Windmill for a pre-season clash.
Rumours of the transfer have rumbled on since the turn of the year, with 19-year-old Blyth, who also enjoyed a promising trial at Birmingham City, being courted by a number of professional clubs.
The Foxes quickly emerged as favourites, however, due in part to Brakes boss Paul Holleran’s friendship with Leicester City assistant manager Craig Shakespeare.
Worries about a heart condition picked up in Blyth’s medical stalled the deal.
However, after tests from a heart-rate monitor were analysed, Blyth was given the all-clear.
The paperwork was completed on Wednesday night, with the move capping a meteoric rise for the teenager, who began his career at Nuneaton-based Bermuda.
He signed for Nuneaton Griff as a 16-year-old and had a spell with Bedworth United, which yielded eight league goals, before joining Brakes in January 2010.
Blyth, who yesterday worked his final day at the accounts department for Nuneaton-based company Cogsdill, scored 24 goals in 64 appearances for Leamington.
Brakes chairman Jim Scott was delighted with the deal and hopes it will inspire other promising young players to use the club as a stepping stone to professional careers.
“It’s a huge opportunity for the lad, but it’s only the first rung on the ladder,” said Scott.
“He’s been given an opportunity that many young players can only dream of and he’ll need to work hard to grasp it.
“But he goes with our very best wishes.”
He added: “It reflects well on the club.
“Paul Holleran took a chance on the lad and it shows that young players can further their careers at Leamington.”
Holleran believes Leicester is the perfect environment for Blyth to continue his footballing education and said it was now up to the striker as to how far he would progress.
“What Leicester have seen is what we saw - raw talent,” said Holleran.
“Jacob’s a good size and can score all types of goals.
“He can improve in that environment and he has the opportunity to be whatever he wants to be.
“I’m obviously delighted for him.
“Worst-case scenario they’ll turn him into a Football League player.
“The best case and he’ll be turning out for their first team.”