Dundalk took full advantage of Cork City’s shock defeat by Limerick, but Stephen Kenny’s men didn’t have it all their own way at the Brandywell.
Now seven points clear of the “Leesiders, Dundalk netted their goals at vital stages of the game - Ciaran Kilduff’s opening goal arrived just seconds before the half-time whistle, while Dave McMillan’s clincher was netted in the 87th minute.
Derry’s hopes were not helped when Conor McCormack was red carded in the 23rd minute, the home side having to play with 10 men for almost 70 minutes.
The visitors created three chances over the opening 15 minutes but Richie Towell, Daryl Horgan and Kildfuff all failed to find the net.
However, in the 18th minute Derry defender, Aaron Barry, strung the palms of Gary Rogers with a superb effort, the Dundalk keeper pushing the ball wide at the expense of a corner.
The game was then turned on its head when Conor McCormack was shown a straight red card in the 23rd minute following what appeared an over-robust challenge of Dundalk full-back, Sean Gannon.
And having voiced his objections to referee, Rob Harvey’s decision, Derry’s assistant manager, Paul Hegarty, was then ejected from the dugout.
The home side was then forced into positional switches, with Mark Timlin forced to lead the front-line on his own, Stephen Dooley, dropping back into midfield.
However, it was the “Candystripes” who threatened again when Timlin’s shot on the turn could only be parried by Rogers but Stephen Dooley struggled to get the loose ball back into the danger area.
Derry had hoped to reach the interval on level terms, poor defensive play cost them dearly.
With four minutes of added time signalled, the home lot suffered a devastating body blow.
Having failed to adequately clear their lines in the 49th minute Dane Massey made the home lot pay dearly, the full-back played Kilduff into a one-on-one situation with keeper, Ger Doherty, and the Dundalk striker made no mistake.
After the break the lively John Mountney squandered a decent chance when well placed, the winger screwing his shot wide of the target in the 55th minute.
Derry continued to push forward and Rob Cornwall really should have done better when heading an effort directly into the welcoming hands of Rogers in the 63rd minute.
Towell missed a superb chance following Mountney’s cut-back five mintues later before Doherty dived low at the feet of Mountney as Dundalk began to turn the screw.
Substitute, McMillan flashed an effort over the Derry crossbar while Timlin’s low shot at the other end failed to find the target.
McMillian was denied by Doherty with six minutes remaining, Towell blasting the loose ball high over the Derry crossbar before the substitue had the final say when finishing well having been played through by Horgan.
Derry City: Doherty; Cornwall, McBride (Sharkey, 73), Barry; McCormack, McEneff; Lowry, McNamee, Jarvis; Dooley (Curtis, h/t), Timlin (Curran, 81).
Dundalk: Rogers; Gannon, Gartland,, Boyle, Massey; Mountney, Towell , O’Donnell, Finn, Horgan; Kilduff (McMillan, 74).
Referee: R. Harvey (Athlone)