DROGHEDA UNITED recovered from the shock of falling behind to a first-minute penalty to strengthen their hold on second place.
First-half goals from Declan O'Brien -- from another penalty -- and Alan McNally, in response to David McDaid's early strike, sealed a fourth consecutive win in league and cup for the Boynesiders.
In an extraordinary start, Derry were awarded a spot-kick after only 10 seconds when McDaid was hauled down in the box by McNally.
McDaid picked himself up and comprehensively beat Drogs 'keeper Gabriel Sava from the spot.
The Boynesiders were then awarded a spot-kick of their own on 25 minutes when Ryan Brennan was taken down by Shane McEleney, and O'Brien blasted the penalty past Gerard Doherty.
From an Eric Foley corner in the 41st minute, McNally rose highest to head home via the post and give Drogheda the advantage going into half-time.
Derry tried to chase the game in the second half but couldn't find an equaliser. Sub Mark Farren went closest for the visitors with a dipping hook shot with 10 minutes left.
DROGHEDA UNITED -- G Sava; B Gannon, A McNally, D Prendergast, P Hand; R Brennan, P Crowley, E Foley (J Sullivan 72), G Brennan; P Hynes, D O'Brien (T Mulvenna 88).
DERRY CITY -- G Doherty; S Madden, S McEleney, C Bonner, D McCaffrey; P McEleney (R Curran 88), B McNamee, R Higgins (M Duffy 32), B Molloy, M Brolly (M Farren 71); D McDaid.
REF -- A Kelly (Cork).