City's was left clinging to top spot on goal difference after its expensively assembled attacking unit failed to score for the first time this season in a 0-0 draw at West Bromwich Albion.
Injury-hit United took full advantage, with Dimitar Berbatov's hat trick powering the champions to a second 5-0 rout in a week against Wigan.
"We're really hitting good form now and there's a real goal threat about us from all departments," United manager Alex Ferguson said. "If we're top of the league or joint top with City by New Year's Day I'll be happy."
The Manchester rivals are 10 points ahead of third-place Tottenham, which plays the first of two games in hand at Norwich on Tuesday.
Chelsea is a point further back in fourth and has all but given on up on its title hopes after Fulham condemned its west London rival to a third consecutive 1-1 draw.
Liverpool, three points behind Chelsea in sixth, failed to seize on Chelsea's slip-up, drawing 1-1 at home to bottom-place Blackburn.
Almost halfway through the season, the title race looks more and more like a two-horse race, although City is starting to show signs of weaknesses after setting a record for the best start ever to a Premier League campaign.
Mario Balotelli struck the top of the crossbar from 30 yards (meters) at the start of the second half having already had a goal disallowed when he volleyed home only to see an offside flag raised.
Lacking their usual bite, the leaders were frustrated by the hosts, who also hit the goal frame through Jerome Thomas.
"We know it is maybe impossible to stay at the top for 38 games but we will try," City manager Roberto Mancini said. "Maybe if we scored in the first half we would have scored two or three goals."
United achieved even more than that, as Park Ji-sung took just eight minutes to put his team in front, picking a spot in the top right of the net after being picked out by Patrice Evra's cutback.
United then took maximum advantage of Wigan's Conor Sammon being sent off for fouling Michael Carrick, with Berbatov — on his second start of the season — holding off Antolin Alcaraz before netting his first of the day.
United had another injury setback at halftime when it lost Jonny Evans, its only fit centre back, with a calf injury that is expected to rule him out for two weeks.
Thankfully for United all the pressure was on the Wigan goal. Berbatov latched onto Antonio Valencia's pass before firing a shot beyond Ali Al Habsi in the 58th.
Valencia got on the scoresheet himself with a low strike before Berbatov completed his hat trick to make up ground on City in the goal difference stakes.
After Park was fouled by Alcaraz, substitute Wayne Rooney allowed Berbatov to net a third from the penalty spot.
"The result pleases me considerably considering the injuries we had," Ferguson said. "We had 10 players missing."
While United's focus is on a 20th league title, Chelsea's is just staying in the four Champions League places.
Juan Mata had put Chelsea in front at the start of the second half, but Clint Dempsey equalized with only Fulham's fifth away goal this season.
At the bottom of the table, Blackburn nudged closer to its relegation rivals by earning a point at Liverpool.
Liverpool midfielder Charlie Adam put the ball into his own net on the stroke of halftime after a corner from Morten Gamst Pedersen to give Blackburn a surprising lead.
Maxi Rodriguez spared Liverpool from embarrassment after the break with his 11th goal in his last 12 starts. But even the return of captain Steven Gerrard after a two-month absence with an ankle injury as a second-half substitute couldn't inspire Liverpool to salvage a victory.
Blackburn is just a point behind Bolton, which lost 2-0 to a Newcastle side that had not won in six matches.
Sunderland climbed four points clear of the danger zone with a 1-1 draw at Everton.