Marshall joined Premiership side Stoke City in 2009 for £30k which was set by a tribunal but any further sale would trigger a 20% sell on fee.
Marshall had spent most of the season at League One side Sheffield Wednesday and manager Gary Megson had hoped to sign Marshall on a permanent deal.
20-year-old Marshall did not feature for the Potteries first team but shone in the reserves where he was captain, he had loan spells at Northampton Town, Cheltenham Toan and Carlisle United as well but it was his spell at Sheff Weds that made Leicester City manager Nigel Pearson make a move.
The Foxes have paid an initial £750k risiing to £1m but with that the Railwaymen will pocket at least £150k from the deal and also making it Peason's fourth signing for the Foxes.