And Derry thoroughly deserved their 2-0 half-time lead having produced some superb passages of play.
The Dundalk defence was regularly stretched by the workrate and trickery of wingers Gareth McGlynn and James McClean.
And those efforts were rewarded in the 31st minute when McGlynn broke the deadlock.
The goal was fashioned by a Patrick McEleney break through the centre of the park and when he found McGlynn, the winger’s low shot crept into the corner of the net.
Derry doubled their lead four minutes later and again, the goal followed a flowing move.
Daniel Lafferty broke on the left and as McClean’s touch appeared to be going wide, Eamon Zayed slid in on the blind side to guide the ball home.
After the break the home side continued to boss the ball and McGlynn went close again in the 58th minute, while Jason Byrne and Mark Quigley had chances near the end, though both failed to trouble home keeper Gerard Doherty.
DERRY CITY: Doherty; McCallion, Greacen, McEleney, Lafferty; McGlynn, Higgins, Deery, McClean; P McEleney (McLaughlin 72), Zayed.
DUNDALK: Cherrie; Madden, Guthrie, Hawkins, Murphy; Kearns , McDonnell (Ward 75), Bennett, Gaynor; Byrne, Quigley.
Referee: D Hancock (Dublin)