Derry went down to a second 4-0 defeat by Dundalk in a week as the Candystripes were outclassed again by the Premier Division champions.
The hosts were seeking revenge after their FAI Cup exit last Sunday but Dundalk struck four first-half goals to ease to victory at Maginn Park.
Robbie Benson lifted the ball over keeper Gerard Doherty for the opener before David McMillan drilled home.
Benson netted from close range and John Mountney steered in the fourth.
City had won their last four league games and trailed second-placed Dundalk by just seven points, but their was a gulf in quality between the sides.
Dundalk seized control after a low-key opening and Michael Duffy flashed across goal before Mountney hit the net, only for it to be ruled offside.
McMillan doubles advantage
Benson's deft finish on 23 minutes set the visitors on their way and it was 2-0 within 90 seconds as McMillan hit the bottom corner after a fine pass from Patrick McEleney.
Derry were sloppy in possession and their error-strewn display was punished again on 33 minutes when Benson pounced to net on the rebound after Doherty could only beat out a Michael Duffy drive.
The fourth came four minutes from the break with Mountney firing home at the backpost from Duffy's cross.
The match was over as a contest by half-time and the second half was largely a non-event as Dundalk took their foot off the gas.
Dundalk keeper Gary Rogers kept out an Aaron Barry shot while Thomas Stewart found the side-netting from a tight angle after rounding Doherty.