The young Blues could not force a way through before the break, with the Blades going ahead through their only real chance of the first half, a long-range free kick on 35 minutes.
But half-time gave City the chance to regroup, and in a much-improved performance they equalised after the break and could have tied up the game.
Ahmed Benali restored parity on 65 minutes, and the United keeper made two superb saves to deny Harry Bunn and Omar Elabdellaoui.
Academy manager Andy Welsh was pleased with City’s battling performance: “We fought back well in what was a physical encounter against a very strong Sheffield United side. Our first half was a bit disappointing, but the lads gave a fantastic response after the break.
“We were positive throughout and given that we had a couple of first-year scholars in the side I thought we coped excellently against a tough team. Our midfield three of Mitchell, Benali and Elabdellaoui stepped it up in the second half and Jeremy Helan was a real threat down the left flank. Emerick Hippias also looked right at home when we brought him for his debut with the Under 18s.”
The Under 16s beat their counterparts from the Steel City 1-0.
Team: E Johansen, Grandison, Smith, Wabara, Veseli, Elabdellaoui, Benali, Mitchell, Helan, Bunn, Olle (Hippias).