The Hatters grabbed the lead in fortuitous circumstances when an Andre Gray effort somehow beat Paul Farman at his near post in the 27th minute whilst they doubled their lead shortly after the break when unmarked substitute Jon Shaw headed in a free-kick.
The Imps continued to battle though and Jamie Taylor produced a superb effort to pull one close to the hour mark but that elusive second wouldn't come as Luton extended their winning run to three games at the expense of a City side whose two-match winning run at home came to an end.
Jamie Taylor and Peter Bore were recalled to the starting line-up and new signing Peter Gilbert was handed his debut as the Imps welcomed promotion favourites Luton Town to The 12th Imp Sincil Bank Stadium on Saturday afternoon.
Taylor returned with Vadaine Oliver ruled out injured whilst Bore was back in the fold at the expense of Colin Larkin who found himself on the bench. Gilbert was a straight replacement for Paul Robson at left-back, with club captain John Nutter still absent with a hamstring strain.
Fireworks greeted the two teams as they were led out of the tunnel by referee Ross Joyce and once the pre-match formalities were done and dusted things got underway with the Imps attacking the Stacey West Stand from the off.
Luton's Alex Lawless had the first effort at goal with his opening minute shot going well over the bar whilst in the second minute Stuart Fleetwood skipped past Andrew Boyce but saw his low strike go a couple of feet wide of the target.
City's response saw David Morgan drag a low shot wide after good build-up play by Jamie Taylor and Peter Bore but all in all it was a pretty scrappy opening quarter of an hour with play concentrated in the middle third.
Good work from lone striker Taylor saw him win the first corner in the 19th minute with skipper Boyce coming close to connecting with Nicolau's deep delivery. Smith was then denied by a one-handed Mark Tyler save as City stepped things up again a minute later
A weak header back from Simon Ainge then forced Tyler to clear hurriedly under pressure from Taylor, who then had a shot deflect behind for another corner which was punched away by Tyler before Nicolau's follow-up effort clipped a Luton man for a corner which ended with Boyce being penalised for a push.
City remained on the offensive with Smith cutting in from the left before firing over but despite this pressure, they found themselves a goal down as, when Andre Gray gained possession on the right, he cut in before drilling in a powerful shot which somehow beat Paul Farman at his near post before the ball nestled in the back of the net.
Goalscorer Gray then outpaced debutant Gilbert to win his side's first corner which Farman did well to punch away whilst in the 36th minute the Luton man picked up a yellow card after going down theatrically in the area after running into Farman.
Five minutes before the break Tyler tipped a goalbound Taylor shot behind before Lawless was booked for a blatant trip on Bore; the resultant free-kick saw Miller ghost in at the back post only to divert the ball wide.
HT: Imps 0 Luton 1
Whilst City emerged unchanged a double change for Luton saw Jon Shaw and Lathaniel Rowe-Turner come on for Scott Rendell and Jake Robinson before the game restarted.
It didn't take Shaw long to make an impact as, when a free-kick was floated into the area 90 seconds in, he found himself in acres of space before having the simple task of heading past former Gateshead teammate Paul Farman who was left hopelessly exposed by his defence.
Strike partner Fleetwood then curled a 25-yard effort wide as the Hatters went in search of a third whilst City's response saw Bore skip past a couple of challenges before falling over the ball as he entered the box.
As the hour mark approached Farman produced a fine save to deny Fleetwood who was one-on-one with the keeper and when the ball was pumped up the other end, Taylor gained possession, advanced forward and unleashed a superb 20-yard strike which fizzed past Tyler for his fourth of the season.
Before play restarted Colin Larkin replaced Mamadou Fofana whilst Morgan tested Tyler from range as the Imps pushed for a leveller. At the other end Jonathan O'Donnell fired well wide from a Gray centre.
Midway through the half Taylor came close to connecting with a Bore cross before Connor Essam sliced another Bore centre on to the roof of his net for a City corner.
Morgan then fired wide before Yaser Kasim replaced Andre Gray for the visitors with a quarter of an hour on the clock. Another Imps corner was then punched away by Tyler under pressure from Boyce.
As City waited to take another corner, which ended up seeing Boyce head wide, teenager Conner Robinson replaced Peter Bore as manager David Holdsworth went for three up front in a bid to salvage something from the game.
Robinson was quickly in the action, being felled from behind by Ainge who had a ticking off from referee Joyce; the resultant free-kick ended up with the Imps winning their ninth unproductive corner.
Time was quickly running out, however, and Luton had a chance to wrap things up a couple of minutes from time but Shaw's effort was superbly deflected over by Boyce. Kasim was then cautioned for delaying the taking of a City free-kick.
Jake Sheridan for Tom Miller was the last change for the Imps as four added minutes was indicated by the Fourth Official.
FT: Imps 1 Luton 2
City: Paul Farman, Dan Gray, Andrew Boyce, Tom Miller, Peter Gilbert, David Morgan, Mamadou Fofana, Adam Smith, Nicky Nicolau, Peter Bore, Jamie Taylor.
subs: Jake Sheridan, Graham Hutchison, Colin Larkin (for Fofana 59), Conner Robinson (for Bore 79), Jake Turner.
goals: Taylor (59)
Luton: Mark Tyler, Ronnie Henry, Simon Ainge, Connor Essam, Jake Howells, Alex Lawless, Jake Robinson, Jonathan O'Donnell, Andre Gray, Scott Rendell, Stuart Fleetwood.
subs: Lathaniel Rowe-Turner (for Robinson 46), Jon Shaw (for Rendell 46), Yaser Kasim (for Gray 76), Dan Walker, Dean Brill.
goals: Gray (27), Shaw (47)
bookings: Gray (36), Lawless (44), Kasim (89)
Referee: Ross Joyce
Assistants: Paul Brown & Dean Hulme
Fourth Official: Alan Marshall
Attendance: 2,970 (864 visiting supporters)