MILAN - Diego Milito scored an early goal before the dismissal of Wesley Sneijder and Goran Pandev added a curling free kick after the break to send Inter nine points clear at the top of the Serie A table.
Julio Cesar saved a penalty from Ronaldinho in injury time at the end of the second half as the Nerazzurri completed a memorable league double over their city rivals without conceding a single goal.
José Mourinho's men made a roaring start, Sneijder shaving the post with a superb long-range swerveshot in the opening seconds. Pandev set up a second chance for Sneijder before assisting Milito for the opening goal.
The Macedonian's long-range pass sailed into the path of Milito and Abate made sure it landed at his feet with a disastrous back-header. El Principe raced on goal found the bottom right corner with a low angled shot.
Fast on the break and superior in midfield, Inter created plenty of chances to double their lead and Dida made crucial saves from Milito and Pandev.
The Nerazzurri were dealt a blow on 26 minutes when Sneijder was shown a straight red card for protesting at Gianluca Rocchi's decision to book Lucio for diving when Ambrosini appeared to make contact with the Brazilian defender.
Leonardo made a switch at the break, bringing on Seedorf for Gattuso, and his team made the extra man tell in a strong start to the second period. Julio Cesar was suddenly a busy man and the Inter goalkeeper brilliantly kept out Seedorf's close-range header, protecting his near post moments later as he watched Ronaldinho's volley fly just wide.
Milito briefly interrupted Milan's momentum with a low shot that was saved by Dida, but the Rossoneri were straight back into attack and Borriello saw two headers saved before watching a third go over the bar.
Inter charged forward and Pandev rattled the post after a defence-splitting one-two with Milito. Pandev went one better on 65 minutes when he curled in a free kick to celebrate his first Milan derby in the best possible fashion and earn himself a standing ovation when substituted by Thiago Motta.
The drama spilled over into added time when Milan were awarded a penalty and Lucio was sent off for the second booking after handling the ball. Ronaldinho stepped up to the spot but Julio Cesar guessed right and pulled off a vital save.
Inter 2-0 AC Milan (HT: 1-0)
Scorers: Milito 10, Pandev 65.
Inter: 12 Julio Cesar; 13 Maicon, 6 Lucio, 25 Samuel, 39 Santon; 4 Zanetti, 19 Cambiasso, 11 Muntari (2 Cordoba 87); 10 Sneijder; 27 Pandev (8 Thiago Motta 67), 22 Milito (45 Balotelli 81).
Subs not used: 1 Toldo, 23 Materazzi, 30 Mancini, 89 Arnautovic.
Coach: José Mourinho.
AC Milan: 1 Dida; 20 Abate, 19 Favalli, 33 Thiago Silva, 77 Antonini (18 Jankulovski 77); 8 Gattuso (10 Seedorf 46), 21 Pirlo, 23 Ambrosini (11 Huntelaar 80); 32 Beckham, 22 Borriello, 80 Ronaldinho.
Subs not used: 12 Abbiati, 4 Kaladze, 9 Inzaghi, 25 Bonera.
Referee: Gianluca Rocchi (Florence).
Booked: Beckham 3, Lucio 26, Favalli 28, Muntari 38, Pandev 65, Thiago Silva 69.
Sent off: Sneijder 26, Lucio 90+1.