Tiago Silva's goal had given Forest an early lead but the clear turning point in the game came just before half-time when Lee Camp saved a Lewis Grabban penalty to prevent The Reds from making it a two-goal advantage.
Birmingham went up the other end and equalised through new signing Scott Hogan and then grabbed all three points with 15 minutes to play as Kristian Pedersen bundled the ball home from close range to leave Sabri Lamouchi's men disappointed.
The Forest head coach was forced into a change from the side that claimed all three points at Brentford during the week. Midfielder Samba Sow was ruled out through injury with Ryan Yates preferred as his replacement while there was a place for the returning Tyler Walker on the bench.
Birmingham were a side low on confidence after just one win in nine and it showed in the early stages of the match. As the home side lacked any cutting edge in attack, it was just a matter of time before Forest went it front.
In fact it took just 18 minutes for Silva to break the deadlock. After a flick on from Sammy Ameobi, Joe Lolley powered a header through to Silva who was bearing down on Lee Camp's goal. After pulling the ball back onto his right foot, the Portuguese midfielder cut inside and hammered home from close range with a tidy finish.
The hosts did recover somewhat after the early setback but The Reds always looked threatening on the break. Lolley on the right was in particular causing problems while Grabban was hanging around with intent inside The Blues' penalty area.
On 40 minutes, Forest's leading scorer had the perfect opportunity to double the visitors' lead from the penalty spot. Camp was penalised for a challenge on Yates inside the area and Grabban was presented with a chance to put some daylight between the sides. Forest's former keeper had other ideas though and made amends by denying Grabban with a strong save to his left-hand side.
Forest were made to pay almost instantly. After an overhit cross was nodded back into the path on Hogan, the January signing glanced a header past Brice Samba to level the scores on 42 minutes.
The home side finished the first half on top and came out after the break looking for a second and it almost came through Lukas Jutkiewicz. A set-piece from the right was put on a plate for The Blues striker in the six-yard box but he was unable to direct the ball on target.
Minutes later, Grabban had a glorious opportunity to make up for his penalty miss. A loose ball found its way to the striker in the hosts' penalty area but his effort shaved the crossbar and the scores remained level.
Lamouchi introduced new recruit Adama Diakhaby on the hour mark in replace of Ameobi as his team went in search of a second goal.
It was the hosts that continued to push forward though as Jeremie Bela tested Samba after Jude Bellingham pulled the ball back from the right-hand side but the Forest keeper was equal to the test and parried the ball to safety.
With 15 minutes left the home side did manage to find a second through defender Kristian Pedersen. Forest failed to clear a corner from the right and after a couple of touches inside the penalty area the ball somehow dribbled over the line to give the hosts' the lead.
Now chasing the game, Forest introduced Tyler Walker after his loan recall from Lincoln City and it nearly had the desired effect. A Lolley cross from the left was met by a diving Walker but his header skimmed the post and went wide.
As the match entered the closing stages the visitors were throwing bodies forward in search of an equaliser. The Blues' defence however remained solid and they hung on to claim all three points.
Forest: Samba; Cash, Worrall, Figueiredo, Ribeiro; Watson (c), Yates (Semedo 70'); Lolley, Silva (Walker 76'), Ameobi (Diakhaby 61'); Grabban
Subs not used: Smith, Carvalho, Jenkinson, Dawson
Goal: Silva 18'
Booking: Ribeiro 88'
Birmingham: Camp; Colin, Dean (c), Clarke-Salter, Pedersen; Bela, Gardner, McEachran (Sunjic 61'), Bellingham (Maghoma 79'); Jutkiewicz, Hogan (Roberts 84')
Subs not used: Trueman, Harding, Montero, Concannon
Goals: Hogan 42', Pedersen 74'
Booking: Sunjic 88'
Referee: Jeremy Simpson
Attendance: 20,837 (2,746 away)