Matt Wieters hit a three-run homer to cap a four-run first inning for the Orioles, who padded that lead to 6-1 by the end of the sixth in front of a sellout crowd at Camden Yards.
The visiting Yankees pulled level with five runs in the top of the eighth, Ichiro Suzuki delivering the game-tying single, but Baltimore hit back immediately with homers from Adam Jones, Mark Reynolds and Chris Davis in the bottom of the inning.
"That's the biggest hit I've ever had in my life," Jones told reporters about his 28th homer of the season. "Everything else up to this point has been leading up to this."
Relief pitcher Jim Johnson shut out the Yankees in the ninth to seal Baltimore's eighth win over New York in their last 11 meetings and improve their overall record this season to 77-60.
The Orioles recorded a season-high six homers in the game, their highest total in a single game since August 28, 2007 against Tampa Bay.
"They're playing with a lot of confidence," said Yankees slugger Alex Rodriguez. "That was pretty impressive there in the eighth."
Jason Hammel, making his first start for the Orioles in almost two months after having arthroscopic surgery on his right knee, allowed just one run on six hits and a pair of walks, while notching six strikeouts.
He pitched five-plus innings, despite being hit in the right elbow by a sharp liner from Robinson Cano to start the fourth.
"I almost expected that," Hammel smiled. "It's been a month-and-a-half, and you get a heat-seeker right back at you, of course.
"I laughed it off after a while. I was fortunate I got hit in a pretty good place and I was able to keep going."
The game exploded in a wild eighth inning when Baltimore reliever Pedro Strop struggled to find the strike zone as the Yankees leveled the score with their five-run onslaught.
But the Orioles were not done, and Jones broke the 6-6 tie with a leadoff homer in the bottom of the eighth off David Robertson before Wieters hit a single on a line drive to right fielder Suzuki.
In-form Reynolds followed with a two-run shot to left field, his second homer of the night, and Davis completed the game-breaking burst with a home run over the right-field wall.
"It's huge, but we still have three big games left," Reynolds said of Thursday's win, the first in a four-game set against the Yankees at Camden Yards. "Anything can happen. We're not resting on our laurels."
(Reporting by Mark Lamport-Stokes in Los Angeles; Editing by Peter Rutherford)
