The Rams head coach saw his team out-classed 4-1 in front of the television cameras at the King Power Stadium on Friday night.
Leicester looked every bit promotion candidates - even title contenders.
A David Nugent double and a deserved goal for Vardy saw the Foxes send out a warning to the rest of the division, with the response particularly impressive after Derby had halved their arrears through a De Laet own goal.
McClaren said the performance was unlike the Rams, who had been on a nine-match unbeaten run that included eight wins until they lost against Wigan on New Year's Day.
"It was very disappointing," said McClaren, who had collected the manager of the month award for December earlier that day. "That wasn't the Derby County of recent months.
"Leicester, give them credit, they were better than us. They were stronger than us and full of running. We were second best all over the field. We haven't normally been like that."
However, the former England boss was in no mood to have a go at his players.
"We can't criticise them too much," he said. "We lost only one game in November and didn't lose at all in December. Law of averages tells you that you are going to lose games, especially in this league.
"It just shows that if we are below it, just a little bit, we are going to get found out.
"Players were nowhere near their best. Maybe it's a reality check. Now we have got to be a bit more realistic with this young team."
McClaren also felt Sunday's FA Cup tie with Chelsea was a contributing factor to Derby's display.
He added: "I don't like to lose or lose in the manner we did. To come to Leicester you need to be at your best, and we weren't.
"I'm not making excuses but the Chelsea game took a lot out of us.
"I felt this game was always going to be too soon, and it proved the case. It took a lot out of us physically and emotionally.
"But it's hard to criticise the boys becasue they have been terrific since we came in."