The Hatters midfielder recklessly tackled across the park and was shown a second yellow card for needlessly tussling with Yannick Bolasie in the 77th minute after being booked initially for dissent.
Luton's guts and determination prevailed early on and winning everything in midfield, they were allowed to work the ball around the Barnet area.
They had a goal disallowed after 13 minutes as Nicholls knocked a free-kick deep across the Barnet box that was headed down into a dangerous area.
With the goalkeeper jostling to clear, Tom Craddock stole in to blast the ball into the net only to be denied by offside.
Luton grew increasingly frustrated, recklessly tackling and conceding multiple free-kicks in their own half, and Nicholls should have perhaps been dismissed for a debatable deliberate elbow to the face of Joe Devera.
But it was Adam Birchall who eventually punished Luton for their irresponsibility.
Kenny Gillet launched a free-kick to an unmarked Gary Breen, who headed low at the far post.
Dean Brill saved well but parried against the post, setting up Birchall for an easy tap-in.
Luton promised again at the beginning of the second half and were rewarded after some sloppy defending from the home side four minutes in.
A long ball to the right flank towards Rossi Jarvis strangely alerted Bees keeper Lee Harrison.
Blindly rushing out to meet the ball, he was caught in no man's land and the right winger poked the ball high and over him into the open goal.
Luton were galvanised and roused even further by a sublime penalty save from Dean Brill.
Paul Furlong stepped up to begin his third century of league goals but was denied by a hand stretching to the top left-hand corner.
But it was Nicholls' sending off that halted their progress and left the Hatters with just a point.