Nicholson fired home from outside the box in the 84th minute to grab victory for the Gulls, who had fought back from behind with Nathan Craig quickly cancelling out Deon Burton's early opener.
Second-placed Port Vale failed to take full advantage as they were held to a 1-1 draw at Burton. Jordan Chapell opened the scoring for the hosts on 73 minutes but Ben Williamson equalised two minutes later.
Fleetwood Town's impressive progress continued as they grabbed a 2-1 win at Chesterfield. Steven Gillespie put the visitors ahead early, and after Tendayi Darikwa's equaliser, Fleetwood won it in injury time when Chris Atkinson scored an own goal from close range.
Cheltenham squeezed home 2-1 against Plymouth after substitute Kaid Mohamed headed the winner in the 78th minute. Conor Hourihane had put the Pilgrims in front on 30 minutes before Steve Elliott equalised.
Bradford City's improvement continued with Nakhi Wells scoring the only goal of the game in the 53rd minute to give the Bantams a 1-0 win over Northampton at Sixfields.
At the bottom, there was good news for Aldershot, who pulled off an excellent 2-1 win at Southend thanks to Sonny Bradley's 87th-minute winner. Earlier, Mark Phillips had equalised for Southend after Danny Hylton's first minute opener.
And Wimbledon also had a productive night with a 3-1 home win over Bristol Rovers. A Garry Kenneth own goal set them on their way with further goals from Rashid Yussuff and Will Antwi. Rovers replied through Tom Eaves, and had Tom Parkes sent off late on.
Barnet are now four points adrift at the bottom after being held to a goalless draw against fellow strugglers Wycombe at Adams Park. George Donnelly and Bobby Grant scored in Rochdale's 2-0 home win over Oxford, while a Daniel Nardiello second-half double helped Rotherham come from behind and claim a 2-1 win over Morecambe, who led through Kevin Ellison.
Jason Walker's 83rd-minute goal gave York a 1-0 win at Accrington Stanley, while Dagenham & Redbridge and Exeter drew 1-1, Medy Elito's 37th-minute opener for the Daggers cancelled out by Jamie Cureton.