Substitute Tiarnan Mulvenna scored just minutes after coming on to deny Derry the chance to move to the top of the Airtricity Premier Division table
Despite the absence of the injured Keith Ward in midfield, Dundalk did well in the middle of the park early on with Richie Towell impressing in the opening stages. He picked out Pat Hoban with a neat ball on the 12 minute mark, but the attacker couldn't deliver in a cross for Kurtis Byrne. Towell went closer himself from a free-kick five minutes later, which Ger Doherty did well to stop.
At the other end, goalkeeper Peter Cherrie got himself into trouble with a poor kick, but did well to prevent Rory Patterson scoring from the mistake. Two first-half injuries to Kevin Deery and Patrick McEleney halted any momentum Derry may have had, and the sides went in scoreless at the break.
The hosts came out the better side after the break, with Michael Duffy going close. Michael Rafter also had a decent opportunity to break the deadlock, but could not open the scoring against his old club. Towell continued to impress for Dundalk, putting his teammates into good positions, with one ball to Darren Meenan looking certain to create an opening, but Ryan McBride got across to make a great block.
Both teams had good chances late on, but with the game looking to be ending in a stalemate, substitute Tiarnan Mulvenna struck in stoppage time to give Dundalk the victory. Declan Devine's man had been pushing for a goal at the other end, but a quick break saw the visitors take the three points which keeps them among the title contenders.