Freddie Sears struck twice with Tyrone Mings and Kevin Bru grabbing their first goals for Town as Blues edged an entertaining game at Portman Road.
Mings gave Town a half-time lead with a powerful header on his 50th appearance for the Club, Sears registering his first goal on home soil soon after the break.
David Davis, who played for Mick McCarthy at Wolves, cut the deficit before Sears struck again.
Davis gave Town an anxious end to the game with his second on the night before Bru tied up the points in added on time, stabbing the ball in from close range.
Town made two changes from the side that went down against Reading at the weekend, Jonathan Parr and Paul Anderson coming in for Jay Tabb and Teddy Bishop.
Parr had the first foray into enemy territory, his driving run and then shot testing Darren Randolph in the Birmingham goal, Bru then volleying wide after Daryl Murphy challenged for Anderson’s cross.
Murphy pulled his shot wide after Bru and Anderson had combined to give him a sight of goal, Freddie Sears whipping in a terrific cross from the right that was inches away from being converted at the far post.
Murphy sent a left foot curler just wide as Town pressed for the early breakthrough, the Republic of Ireland international linking up well with Sears, the former West Ham player seeing his shot deflected wide.
That breakthrough came on 24 minutes, Mings powering in a header from Anderson’s corner seconds after Blues were forced into a change with the injured Cole Skuse replaced by Jay Tabb.
Town had an anxious moment when Bart Bialkowski came under pressure from a corner, the ball spinning away to safety.
The Blues’ ‘keeper made amends with a brilliant save seconds later, denying Clayton Donaldson who got clear on goal then at the other end, Murphy fired into the sidenetting from the angle with Anderson screaming for the ball across goal.
Luke Chambers cleared from Donaldson as Birmingham threatened an equaliser on the half hour, Lee Novak heading over from a good position soon after.
Christophe Berra headed wide from Anderson’s delivery, Tommy Smith deflecting his header over the bar after Tabb had found him with a lob into the box before the half came to an end with Murphy spinning away from his marker but his cross evaded the supporting Blues.
Murphy headed against the post from Tabb’s cross as the second-half got underway, but seconds later Blues had doubled the advantage, Sears bursting clear from Chambers’ knock forward and making no mistake.
Anderson almost carved out a third for Murphy but it was Birmingham who struck on 57 minutes, Paul Caddis sending in a terrific cross and Davis heading past Bialkowski.
Mings drilled an excellent ball in from the left that Paul Robinson cleared but on 64 minutes, Town had daylight again with Sears racing clear and burying his shot past Randolph.
The highly-rated Demarai Gray was introduced for Birmingham before the restart, David Cotterill making way. Richard Chaplow entering the fray as well to replace Anderson.
Gary Cotterill’s side wouldn’t lie down though and Davis fired in his second of the night on 78 minutes, the ball drifting over the line after Bialkowski looked to have made a terrific save.
Parr slid in to make a crucial tackle on Wes Thomas as Birmingham looked for a leveller, Chaplow doing the same as Gray threatened to get in.
Gray showed electric pace to get away from Mings but his cross was too strong, then Murphy brought a save out of Randolph, Sears inches away from forcing the rebound home.
Randolph saved again from Murphy after the striker got his head on Tabb’s corner before Bru wrapped up the points in added on time.