Wolfsburg defender Alexander Madlung headed in to put the hosts in front at the end of the first half and Christian Gentner slotted home in time added on in the second half to make it 2-0.
Gladbach's Michael Bradley pulled one back with the last kick of the match.
Wolfsburg have 16 points, with Bayer Leverkusen and Hamburg leading on 21 points following their 0-0 draw on Saturday.
Bayern Munich's 2-1 victory over Freiburg on Saturday left them sixth on 15 points.
"This was not a good game but it is important that we are in touch with the top spots," said Wolfsburg playmaker Zvjezdan Misimovic, who set up the first goal.
Despite having last season's top striker Grafite on the bench after a fall-out with coach Armin Veh over his substitution last week, Wolfsburg clearly had plenty of firepower.
Striker Edin Dzeko twice rattled the woodwork early on and Obafemi Martins managed to miss from point-blank range with the visitors on the back foot for the entire first half.
The opening goal came when Madlung headed in a Misimovic corner deep in first-half stoppage time.
Wolfsburg stepped off the gas in the second half creating no real scoring chance until Gentner fired a low drive in stoppage time to make it 2-0.
Bradley managed a consolation goal just before the final whistle but could not prevent a fifth straight loss that left the visitors a place off the bottom with seven points.
Borussia Dortmund notched their third win this season when they beat VfL Bochum 2-0 to move into 10th place with 12 points, leaving the visitors in the relegation zone on eight points.
Argentine striker Lucas Barrios grabbed his second league goal of the season on 20 minutes. Neven Subotic doubled the score with a fine header six minutes after the re-start.
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