The Repsol Honda rookie had been looking for a way past Lorenzo on the final lap, trying on the brakes into Dry Sack corner but running wide on the brakes.
He then lined up a moved into the final turn, appropriately-named Lorenzo's after a ceremony this weekend, the pair touched and the Yamaha man was pushed wide, leaving Marquez to take second and the series lead.
Pedrosa, meanwhile, cruised over the line for the win after building a four-second gap from lap four to throttle off in the closing stages and win by two and a half seconds from his team-mate.
Lorenzo will be spitting at the move, which was reminiscent of Valentino Rossi's famous nerfing of Sete Gibernau at the same place, but he is now third in the title stakes, four points behind Marquez.
Rossi mounted an early challenge, pushing past Britain's Cal Crutchlow for fourth on the exit of turn one at the first time of asking. He then went under Marquez for third at the last corner but the youngster was having none of it and re-passed him and put a gap into the nine-time world champion.
Crutchlow, who is sporting sore kidneys after two big crashes yesterday, looked to have the measure of Rossi but dropped back into a battle with Alvaro Bautista for fifth. The Spaniard got past Crutchlow mid-race but it didn't last long, with the Isle of Man resident going back in front.
Nicky Hayden had a lonely race for seventh place while Ducati team-mate Andrea Dovizioso had his hands full with Aspar CRT man Aleix Espargaro. With eight laps left, the Spaniard passed Dovi but the Italian used the superior power of the full prototype to bag eighth.
Bradley Smith took his first top-10 finish of the season, just ahead of Ducati test rider Michele Pirro and CRT man Hector Barbera.
Michael Laverty was also in the points, grabbing 13th place in front of Danilo Petrucci. Stefan Bradl and Andrea Iannone were both fallers.
1. Dani Pedrosa (Spain) Honda 45:17.632
2. Marc Marquez (Spain) Honda 45:20.119
3. Jorge Lorenzo (Spain) Yamaha 45:22.721
4. Valentino Rossi (Italy) Yamaha 45:26.546
5. Cal Crutchlow (Britain) Yamaha 45:30.295
6. Alvaro Bautista (Spain) Honda 45:32.726
7. Nicky Hayden (U.S.) Ducati 45:43.264
8. Andrea Dovizioso (Italy) Ducati 45:59.513
9. Aleix Espargaro (Spain) Aprilia 46:01.444 1
0. Bradley Smith (Britain) Yamaha 46:02.093
11. Michele Pirro (Italy) BCL 46:03.606
12. Hector Barbera (Spain) FTR 46:17.491
13. Michael Laverty (Britain) Aprilia 46:27.375
14. Danilo Petrucci (Italy) Ioda 46:35.445
15. Colin Edwards (U.S.) FTR 46:35.809
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