Derry have dropped to fourth in the Premier Division with this defeat by leaders Dundalk at Oriel Park.
Lukas Schubert's close-range finish put the visitors ahead but Dundalk hit back with a low finish from John Mountney and a powerful Brian Gartland header.
The champions dominated the second half and David McMillan fired home the third from Daryl Horgan's clever pass.
Shamrock Rovers beat Galway 4-2 to go a point above Derry while Dundalk moved eight points clear at the top.
The champions were playing their sixth game in a fortnight and Candystripes boss Kenny Shiels hoped to capitalise on any possible tiredness.
Indeed, Derry were in front after just six minutes when keeper Gary Rogers parried a Barry McNamee shot and Schubert was perfectly placed to slot in.
The hosts showed no signs of weary legs, however, and they struck twice in four minutes to take control of the game.
Mountney levelled with a crisp half-volley into the bottom corner on 13 minutes before Gartland headed in from a rebound after Dane Massey's header crashed against the bar.
Aaron McEneff came come to an equaliser on 27 minutes when his 30-yard free-kick whistled just over the Lilywhites bar.
Derry rarely threatened for the remainder of the match as Stephen Kenny's side took a grip on affairs.
The excellent Horgan set up McMillan to give Dundalk a two-goal cushion, with the forward rifling just inside the post for his 20th goal of the season.
McMillan poked over and Gerard Doherty denied Massey as Dundalk ran out comfortable winners.