The Team Astana rider stretched his lead at the top of the standings to three minutes 37 seconds after powering away from his rivals in the final phase of the hors categorie climb to Chamrousse.
Alejandro Valverde (Movistar) moved up to second place on what proved a dismal day for Richie Porte, with the Team Sky leader trailing in over nine minutes behind Nibali and slumping to 16th place overall — having started the day in second place.
Nibali cemented his dominance in style as he gave chase to leading pair Rafal Majka (Tinkoff-Saxo) and Leopold Konig (Netapp-Endura) with 10km to go before bursting clear.
Majka claimed second place ahead of Konig, with Valverde 50 seconds down in fourth place.
Nibali, who also assumed the polka dot jersey from Joaquim Rodriguez (Katusha), said: “For the coming days, I only know that I have to remain quiet — there are still many mountains ahead.
“I’ve suffered a lot today because of the heat. At least as we were climbing, I felt better and better.”
Ireland’s Nicolas Roche was 43rd yesterday, over 19 minutes down, and he is now 46th overall at 1:16:44.