Derry City remaining five points of the bottom two after a seventh defeat of the season on Monday evening.
First-half goals from Sean Murray and Jordan Flores gave Dundalk a 2-1 win at the Ryan McBride Brandywell Stadium.
Darren Cole pulled one back for Derry with 18 minutes remaining.
With three game to play Derry are not out of trouble just yet, as Finn Harps who hold the play off spot have four games to play, three of which are at home.
Dundalk meanwhile are a win away from securing an eighth consecutive season of European football.
Derry's Ciaran Harkin told Gary Ferry of the Derry News they were disappointed to give Dundalk and early lead...