LeMond took over the lead from Bernard Hinault by finishing three minutes 21 seconds ahead of the Frenchman in the 17th stage of the world's premier cycling race.
With the Tour now in its third and final week, LeMond leads Switzerland's Urs Zimmermann, in second place, by 2:24 , and Hinault, in third, by 2:47.
The 17th stage was won by Eduardo Chozas of Spain. Zimmermann was second and LeMond third.
The gap between LeMond and Hinault, his teammate on the French racing squad, renewed speculation about the rivalry between the two. Hinault, who is aiming for a record sixth Tour de France triumph, is in his eighth and perhaps final appearance in the event.
LeMond claimed he held back last year to enable Hinault, who was injured in a crash, to secure his record-tying fifth victory. This year, LeMond said that Hinault told him he would repay the compliment.
Hinault had said he would help the Californian, but many feel the Frenchman's stubborn nature would not allow him to surrender without a fight, particularly with the Tour record tempting him.
During one of Sunday's Alpine climbs on the 118-mile stage, Hinault complained of knee trouble and called for a wrench to lower his saddle so he would not extend the knee too much on further climbs.
At that point, LeMond and Zimmermann were chasing to pull back the early leaders after racing away on the descent from the Col de l'Izoard.
Chozas rode away at the 24.86-mile stage and gradually built up a lead of nearly 19 minutes on the Col de Vars mountain section as the drama behind him was unfolding.
Hinault was not in the first 12, as eight riders began chasing Chozas and, by the top of the next climb, the 2,361-yard Izoard, he had slipped more than a minute behind a group that included LeMond.
On the 12.43-mile descent, LeMond and Zimmermann made their move.
They began passing the early leaders and at the foot of the day's longest climb, LeMond and Zimmermann had caught all but Chozas.
More than 2 minutes 40 seconds behind, Hinault was fighting back after being joined by Belgian Eddy Schepers and Scot Robert Millar.
Millar said later: "I was completely shattered, and I just wanted to stay clear of Hinault."
He achieved this, finished 12th, and is still fourth overall but is 6 minutes 19 seconds behind LeMond.
Today's 18th stage takes the race from here to another summit finish at Alpe d'Huez, a climb of 22 hairpin bends. The 100.66-mile ride also includes the 2,460-yard Galibier and the 2,067-yard La Croix de Fer which are sure to soften up the field before the final test.