Nemanja Vidic headed United in front in first-half stoppage time and Wayne Rooney doubled their advantage on the hour with a close-range volley. Dimitar Berbatov completed the rout in the 87th minute to lift United into third place.
Alex Ferguson's side are now just five points behind Liverpool and one behind a Chelsea side who were desperately lacking any spark. United have two games in hand of both their main title rivals.
United face Wigan Athletic on Wednesday and Bolton Wanderers on Saturday. Should they win both they will be top of the league before Liverpool face Everton in the Merseyside derby next Monday.
Defeat was Chelsea's first on the road in the league this season and continued manager Luiz Felipe Scolari's poor record against the top sides since taking over at Stamford Bridge.
Earlier, Wigan Athletic won for the sixth time in seven league matches when Maynor Figueroa's stoppage time header earned a 1-0 victory over Tottenham Hotspur who are third from bottom.
United were dealt a blow before kick-off when central defender Rio Ferdinand was ruled out with a recurrence of a back injury that will require a visit to a specialist next week.
However, his absence was hardly noticed as keeper Edwin van der Sar barely had a save to make as United made it eight league games without conceding a goal.
A yellow card for Frank Lampard after a foul that left Cristiano Ronaldo in a heap set the tone for a messy opening to a match that could be a pivotal point in the season.
United appealed for a penalty when Ashley Cole appeared to block a cross with his arm but it took them half an hour to force Petr Cech into a save when Berbatov combined with Rooney before scuffing a shot.
United began to ratchet up the pressure on the Chelsea goal just before the interval.
John Terry was forced into one desperate block from a Park Ji-sung shot before Ronaldo had a headed goal disallowed after referee Howard Webb ordered a crafty United corner to be re-taken -- much to the fury of Rooney.
Chelsea failed to learn their lesson and as Giggs delivered the ball again in stoppage time, Berbatov got a slight touch and Serbian defender Vidic crept in at the far post to nod the ball past Cech.
The goal knocked the stuffing out of Chelsea and despite Scolari sending on Nicolas Anelka to partner Didier Drogba up front after the break it was United who moved up a gear.
A sweet movement on the hour mark saw Ronaldo's back heel release Patrice Evra and his pacey cross was met first time by Rooney to double United's lead.
United could have scored on numerous occasions as Chelsea wilted before Berbatov supplied the final flourish, connecting with a Ronaldo free kick.
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