Mills signed for Second Division club Leicester City on 2 March 1989 as part of the deal that saw Phil Turner join County for a fee of £125,000, with over two months of 1988–89 remaining. He slotted straight into the starting line-up, making his debut two days after joining in a 1–0 victory at home to Walsall. He made 13 consecutive appearances for Leicester before missing the last two matches of 1988–89, his new club finishing 15th in the Second Division. His first goal for Leicester was the only goal in a 1–0 win away to Stoke City on 25 November 1989. Other than a spell out of the team from early September to mid November 1989, Mills was a regular in the Leicester team that ranked 13th place in the Second Division in 1989–90, making 30 appearances and scoring 4 goals. He established himself as a popular player with the supporters, and was named the club's Player of the Year.