Down came from behind to win a thrilling Celtic Park encounter 2-17 to 1-15 and set up an Ulster SFC semi-final with All-Ireland champions Donegal.
Eoin Bradley slotted over four points and set up a 31st minute goal for skipper Mark Lynch as Derry came from behind to lead by 1-10 to 0-9 at the break.
But goals from Donal O’Hare and Mark Poland swung it for the Mourne men, who stormed to victory with late scores from inspirational midfielder Kevin McKernan.
It was the game that set the championship alight following a series of one-sided encounters, and Down’s late surge gave them a deserved five-point success.
Both sides committed to a positive, attacking game, and the result was a fast, free-flowing encounter with lots of spectacular scores and twists and turns in abundance.
Benny Coulter was heavily involved in the moves which led to early Down scores from Mark Poland and Ambrose Rogers, and they moved into a 0-3 to 0-1 lead when Donal O’Hare, their top scorer in the National League, tapped over a free.
Benny Heron, from a ’45, and Charlie Kielt hit Derry scores, but the Mourne men, with Kalum King and Kevin McKernan, still looked confident and comfortable at 0-5 to 0-3 after 14 minutes after McKernan had fired over a wonderful score.
The finishing was of the highest order from both teams with James Kielt drilling over a couple of superb long range efforts and McKernan doing likewise at the other end.
But as the half wore on, it became clear that Eoin Bradley had the measure of Down full back Benny McArdle and he cut through for a couple of points that had the Oak Leaf faithful in raptures.
It was James Kielt who brought the sides level with another long range special in the 27th minute and that score marked the beginning of a golden spell for the home side.
Bradley was in the mood and his ball-winning and turn of pace saw him skip through for two more scores, before he provided the killer pass for centre back and captain Mark Lynch to collect and finish low to the net past Brendan McVeigh in the 31st minute.
Bradley was denied just before half-time by a sensational McVeigh save, and they went into the break on a high, ahead by 1-10 to 0-9.
But Down turned a four-point deficit into a four-point lead in the third quarter with two superbly engineered goals.
Conor Laverty and Mark Poland combined, before the latter’s final pass was flicked to the net by O’Hare in the 45th minute.
Seven minutes later the same three players were involved in their sides’ second goal. Laverty dispossessed a ponderous Ryan Scott 50 metres out and transferred quickly to O’Hare, whose cross was finished past Eoin McNicholl by Poland.
Debutant Niall Madine nailed his third point from play, and when Kalum King hit the target in the 55th minute, Down led by 2-14 to 1-12.
Lynch’s move to midfield helped Derry gain a greater share of possession in the middle third, but left gaps at the back that were later to be exploited, particularly by man of the match McKernan.
James Kielt, Brian McCallion and Lynch all scored to bring Derry back to within two points, but they were increasingly vulnerable in defence as they desperately chased the game.
O’Hare came close to putting the outcome beyond doubt when he smashed a shot against the butt of a post, but in the final five minutes, the imperious McKernan did put the game out of Derry’s reach when he charged through the middle to post two terrific scores.
Derry: E McNicholl, G O’Kane, C McKaigue, R Scott, C Kielt (0-1), M Lynch (1-1), B McCallion (0-1), P Bradley, R Bell, A McAlynn, J Kielt (0-5, 1f), E Lynn (0-1), B Heron (0-2, 1 ’45), E Bradley (0-4), C Delvin.
Subs: D Mullan for Bell, E McGuckin for Devlin, D Brown for McCallion, B Gormley for P Bradley.
Down: B McVeigh, D McCartan, B McArdle, R Boyle, D Rooney (0-1), P Turley, K Quinn, K King (0-1), K McKernan (0-4), A Rogers (0-1), M Poland (1-2), N Madine (0-3), D O’Hare (1-4, 0-2f), B Coulter, C Laverty.
Subs: D Savage for Rogers, R Mallon for Quinn, J Johnston (0-1) for Coulter.
Referee: D Coldrick (Meath).
Highlights and analysis of all the weekend’s action on The Sunday Game from 21:30 on Sunday 2 June on RTÉ Two and RTÉ.ie (Ireland only).