On a day when the pre-race favourites were expected to make their move, the Leopard Trek rider surged clear to win by more than two minutes.
The margin was not enough to snatch the yellow jersey from Thomas Voeckler, but slashed the Frenchman’s lead over Schleck (inset) from two and half minutes to 15 seconds.
Defending champion Alberto Contador’s hopes look over, however, after he lost more ground on Voeckler to trail him by almost five minutes with just three stages left.
Yet Schleck’s elder brother and team-mate Frank, who crossed the line second, and Australian Cadel Evans are still in contention, just over a minute off the lead.
Schleck junior might have taken the overall lead with his dogged climb to the highest finish in Tour history, but the 26-year-old was denied by a late burst from Voeckler, of Europcar.
The Luxemburger attacked two thirds of the way through the 200km stage from Pinerolo to Galibier Serre-Chevalier, quickly catching an early breakaway group.
He opened up a lead of more than four minutes as Evans and Voeckler struggled to rein him in, although they did shave his winning margin to little more than two minutes.
An anticipated challenge from Contador, winner of the last two Tours, never materialised, the Spaniard finishing 15th, almost four minutes behind Schleck.