The Australian rider took the overall lead in the process after riding away from overnight leader Andrew Talansky in the final 2km.
The 28-year-old from Tasmania burst out of an elite group and bridged the gap to Denis Menchov before riding away from the former Giro d'Italia and Vuelta a Espana champion to take his third win in Sky colours.
He now leads Talansky by 32 seconds on GC with Saturday's 220km road stage and Sunday's concluding uphill time trial to follow.
Jens Voigt (RadioShack-Leopard), Cyril Lemoine (Sojasun), Thierry Hupond (Argos-Shimano) and Paolo Longo Borghini (Cannondale) were involved in the break of the day.
After escaping shortly after the start of the 176km fifth stage from Châteauneuf-du-Pape, they built up a five minute lead after 40km.
That advantage stood at 6:30 with 80km to go, following a pair of category two climbs, but their advantage dwindled as they crossed a trio of category three climbs and was down to two minutes with 20km remaining.
Sensing the inevitable, irrepressible German Voigt attacked the break but he was caught with 7.5km remaining as a small group formed on the 16.8km finishing climb which has an average gradient of 6.6%.
Team Sky were at the head of the peloton but played a waiting game as Michele Scarponi attacked. Talansky tried to follow but he was marked by Porte before Menchov's burst.
Sensing a weakness in the young American, Porte made his move and stormed home. He finished 26 seconds ahead of Menchov with Talanksy leading an elite group over the line a further seven seconds back.
Porte, who was fourth in the 2010 World ITT, is now a strong favourite for the race although Dutch time trial champion Lieuwe Westra (Vacansoleil) stands third on GC at 42 seconds.
He said: “It’s nice to win a stage of Paris-Nice and to take the jersey. I know full well that tomorrow is another day and there’s also the last stage. But I feel we have a good to team to defend yellow so fingers crossed.
“It all played into our hands in the finale, especially having David López there as my wingman. He was so cool, calm and collected which was really helpful. So credit to him and the whole team today.
“I’ve done an apprenticeship if you like under Bradley Wiggins and Chris Froome and also before that Alberto Contador. You don’t always get the opportunity to ride for yourself in a team like this so when it comes you have to grab it with both hands. It’s just nice to get a big victory and I’ll take the rest as it comes.”