The Candystripes took a first half lead on 31 minutes through Adam O’Reilly.
Will Patching, Daniel Mullen and Michael Duffy all netted in the second half for the home side.
Ryan O’Kane got a consolation goal for the visitors but it was another miserable night for the Oriel Park side who remain rooted to the bottom of the league table without a win, picking up only three points out of its first eight games.
With virtually their first meaningful attack, the Candy Stripes broke the lead deadlock as O’Reilly made no mistake from six yards, after Dundalk failed to clear Paul McMullan’s low right wing cross.
Both sides struggled to get going in the opening 45 minutes, but O’Reilly’s first goal for the City in 33 games, separated the sides at the break.
City doubled their advantage after just 33 seconds into the second half in sublime fashion, as Patching’s dipping 25 yard effort from the left hand side of the box, flew high into the top corner past Dundalk goalkeeper Ross Munro. Munro was called in action again soon after this time, diving low to his right to turn away McMullan’s 20 yard strike.
Derry continued to pile forward and deservedly netted a third 58 minutes as Mullen finished off a neat passing move by blasting high into the net with his left foot from an acute angle.
The Foylesiders netted a fourth on 65 minutes as Duffy joined Patching by scoring against his former club, his angled drive from the left took a deflection off Daryl Horgan and sailed into the net.
The Lilywhites got a consolation on 75 as Ryan O’Kane produced a neat finish blasting low into the bottom right corner, after he reacted first to a loose ball on the edge of the Derry penalty box.
Derry are next in action away to Drogheda next week.
Derry City: Brian Maher, Ronan Boyce, Mark Connolly, Cameron McJannet, Ciaran Coll; Adam O’Reilly, Will Patching (Jordan McEneff 71), Paul McMullan; Daniel Kelly (Cameron Dummigan 59), Daniel Mullen (Shaun Patton 84), Michael Duffy (Ben Doherty 71).
Dundalk: Ross Munro, John Mountney (Hayden Muller 67), Zak Johnson, Mayowa Animasahun, Zak Bradshaw; Koen Oostenbrink (Paul Doyle 59), Robbie Benson (James Gullan 59), Daryl Horgan, Robert Mahon (Sam Durrant 59), Ryan O’Kane, Scott High (Dara Keane 67).
Referee: David Dunne (Dublin)
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