The pink jersey wearer attacked on the final climb with a kilometre to ride to claim his second stage win this year, finishing two seconds ahead of defending champion Tom Dumoulin.
Yates now leads by 41 seconds from Dutchman Dumoulin, with Thibaut Pinot of Groupama-FDJ in third at 46 seconds and home hopeful Domenico Pozzovivo (Bahrain-Merida) a minute off the lead.
The longest stage of the Giro, at 244km, was expected to be...
Froome finished 40 seconds behind Yates to again slip out of the top 10.
"I've got a hard relationship with Italy; it's love and hate".
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Quick-Step Floor's star sprinter Elia Viviani, in the points jersey, was also with Chaves and the race split into two as general classification and sprint teams in the peloton worked together to distance them.
Surely Froome and the Team Sky hierarchy have now got a bit of thinking to do about whether they continue chasing a lost cause, or cut their losses and pull out with an eye on the more familiar ground of the Tour de France in July.
A series of attacks began late in the day with stage honours on the line, and as the tension increased Dumoulin was caught in a small crash and needing a bike change before chasing back on. Mohoric, a freakish descender, had escaped with 38 kilometres to go, and while Denz joined him 19 kilometres later, he ultimately didn't have enough firepower to sprint past Mohoric in the final metres.
Ireland's Sam Bennett won the sprint for third place 36sec later.
The stage victor, Matej Mohoric, said: Todays goal was to make the breakaway.
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"I had already circled this stage before the Giro started", Mohoric said. You saw with Esteban Chaves losing time on stage 10 how quickly this race can change so I'm going to keep plugging away. "I did at the beginning with 12 other riders but, unfortunately, because of what happened to Chaves, the peloton came across", Mahoric said. Im delighted that I have taken this opportunity.
The four-time Tour de France victor lost time in the mountains of the southern Abruzzo region on Sunday, and is 11th overall after nine stages.
"I wasn t convinced I d win the sprint against Nico Denz".
"One of those stages we will talk about for a while".
Another hilly stage is scheduled for Wednesday with a 156-kilometer leg from Assisi to Osimo that concludes with a short but steep climb.
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Mengden has allowed no more than two runs in his past three outings and no more than three in seven of his nine starts. Oakland has won four in a row over the Red Sox and has won the season series for the second year in a row.