PAT HOBAN's bullet 94th minute header broke Derry City hearts at Oriel Park as the Candy Stripes were denied a significant win.
Ruaidhri Higgins' troops were on the cusp of a victory which would have taken Derry above Dundalk into second with a game in hand.
James Akintunde fired home a 12th minute strike from close range with his seventh goal of the season during an action-packed encounter.
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Joe Thomson then missed a glorious chance to add a second towards the end of the first half as Nathan Shepperd saved at his feet when clean through on goal.
Dundalk applied the pressure late in the second half and in the final minute of the five additional minutes signalled at the end, Hoban powered home a header from Stephen Bradley's cross to clinch a point.
It was a bitter blow for Derry who battled superbly throughout and they go into next Friday night's home clash with leaders Shamrock Rovers on the back of a seven match unbeaten run.
Ruaidhri Higgins made two changes from the team which eased past Oliver Bond in the first round of the FAI Cup with Shane McEleney and Joe Thomson replacing Ciaran Coll and Brandon Kavanagh.
Mark Connolly returned to Oriel Park and was handed a mixed reception from the home support as he made his first league start for Derry at the heart of defence.
Following his debut hat-trick loan signing Declan Glass also made his first league start and Ryan Graydon passed a late fitness test to take his place on the right wing.
With both teams hoping to take advantage of leaders Shamrock Rovers European escapades, there was much at stake in this top of the table meeting.
Dundalk enjoyed the best of the early chances and when Pat Hoban played Stephen Bradley into space down the right, he cut it back for Joe Adams and his shot struck the back of Shane McEleney and went behind for a corner.
Moments later Bradley clipped a lovely ball towards the back post towards Hoban who couldn't manage to get a head to it and a glorious chance was lost.
It was an encouraging start from the home side but it was Derry who broke the deadlock on 12 minutes.
Joe Thomson dispossessed Dundalk player of the month Greg Sloggett deep inside the Dundalk half and poked the ball into the path of Akintunde. The striker raced towards goal, cut back onto his right foot and fired into the net past Nathan Sheppard from eight yards for his fourth goal in the three games.
New Dundalk signing Alfie Lewis was introduced into the fray on 22 minutes to replace the injured Paul Doyle who collided with Sadou Diallo.
Daniel Kelly, who was causing problems on the left flank, went down injured five minutes later and was replaced by Ryan O'Kane as Dundalk's troubles deepened.
Thomson was sent clean through on goal on 35 minutes after a sublime pass through the middle from Diallo but he overran the ball and showed too much to Shepperd who saved at the Scotsman's feet.
Deep into first half stoppage time Dundalk broke at pace with O'Kane who got in behind the Derry defence and forced a neat save from Brian Maher at full stretch and McJannet cleared the danger.
It was a big moment in the game as Derry took a slender but thoroughly deserved lead into the half-time interval.
Dundalk started the second half brightly and Sam Bone came so close to finding the bottom corner on 48 minutes as he glided past two challenges on the edge of the Derry box but dragged his left footed shot just wide.
Connolly made a robust challenge on Adams right in front of the referee in the middle of the park which drew a chorus of boos from the home attendance. The challenge led to a Derry corner which came to nothing.
At the other end Hoban's looping header forced a fantastic save from Maher who tipped his effort over the bar but the referee spotted a push on Connolly in the build-up and Derry were awarded a free-kick to relieve the pressure.
Dundalk had a decent chance to equalise when Hoban's crossfield pass sent Bradley in behind on the right but his strike from an angle went wide of the far post on 64 minutes.
The Lilywhites were ramping up the pressure with a succession of corners and from Keith Ward's inswinger Sloggett headed over the crossbar on 78 minutes.
That was the cue for a double substitution from Derry as Michael Duffy was jeered by a section of the 2,856 attendance as he made his return to Oriel Park to replace Glass and Kavanagh came on for Graydon.
Duffy won a free-kick with his first contribution of the match when Sloggett clipped his heels on the edge of the Dundalk box. And the Galliagh man forced a save from Shepperd with the resultant set-piece.
Derry were living dangerously and survived two significant chances on 83 minutes. Firstly Bradley got in behind McJannet and fizzed a low cross across the six yard box but the superb Dummigan cleared.
Moments later Ward worked the ball to O'Kane 10 yards from the Derry goal and just as he was about to strike the ball Diallo got the slightest of touches to take the sting out of his shot which was saved by Maher.
At the other end Derry sub, McGonigle curled an effort high over the bar.
There was five additional minutes signalled by the fourth official and in the 94th minute Bradley crossed into the box and Hoban rose majestically to head home a precious equaliser.
Dundalk: N. Sheppard: L. Macari (R. Benson 74) , S. Bone, A. Boyle, D. Leahy,; S. Bradley, G.Sloggett, P. Doyle (A. Lewis 22), D. Kelly (R. O'Kane 27); J. Adams (K. Ward 74), P. Hoban; Subs Not Used - P. Cherrie, J. Martin, R. McCourt, R. Hauge, D. McMillan.
Derry City: B. Maher; C. Dummigan, M. Connolly, S. McEleney, C McJannet; R. Graydon (B. Kavanagh 77), S. Diallo, P. McEleney, D. Glass (M. Duffy 77); J. Thomson (D. Lafferty 87); J. Akintunde (J. McGonigle 67): Subs Not Used - N. Gartside, C. Coll, L. Mullan, C. Kavanagh, C. Porter.
Referee - Rob Hennessy.