The penalty comes as a result of a breach of the league's Profit and Sustainability Rules (PSR), the English Football League (EFL) said.
The breach is said to have taken place during the 2023-2024 season, when Leicester won the Championship and returned to the Premier League.
The club was in 17th place before the points deduction and is now drawn into a relegation battle with 32 points.
Earlier in the season, the club dismissed former Hammarby coach Marti Cifuentes as head coach.
Leicester were relegated to the Championship last season. In 2016, the team won a sensational Premier League title, but in recent years have oscillated between the top and second-highest divisions in England.
