With Marcelo Bielsa's Marseille beaten on Friday, Lyon had an opportunity to jump into first place and they took advantage thanks to Alexandre Lacazette's brace.
Lacazette struck twice in the first half at the Stade de Gerland before Nabil Fekir made it 3-0 shortly after the interval.
It puts Lyon a point clear at the top of the table, while Toulouse are 15th, just one point ahead of the relegation zone.
Lacazette opened the scoring in the 14th minute in front of his team's home fans.
Fekir played him through down the right and he powered a shot inside Ali Ahamada's near post.
Lacazette was fortunate to double Lyon's lead in the 27th minute as a loose ball fell to him and he swept in from inside the area.
It was 3-0 and the game was over early in the second half.
Rachid Ghezzal slid a wonderful pass through in behind and Ahamada saved Fekir's shot in a one-on-one, but the ball spun into the open goal.
The other two games on Sunday finished goalless as Nantes were held to a 0-0 draw by Metz, while Monaco and Bordeaux were also unable to be separated.
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