Bouhanni used his trademark aggression to power past Slovenia's Mezgec in the final straight and hold off a late surge by Italian youngster Nizzolo.
"I was about half a bike length behind Mezgec and in good contact after the final bend," Bouhanni said after his eight win of the season. "My team-mates did a great job to position me well in the final and I had the power to come through and take the win."
Australian Michael Matthews (Orica-GreenEdge) finished fourth to retain his leader's pink jersey at the conclusion of the first week of the race.
Matthews has a 21-second lead over compatriot Cadel Evans (BMC) and 1:18 over Colombian Rigoberto Uran (Omega Pharma-Quick Step) ahead of the race's first major summit finish on Saturday.
Italy's Roberto Ferrari (Lampre-Merida) took fifth place in the bunch sprint at the conclusion of the lumpy 211km stage from Frosinone, while American Tyler Farrar (Garmin-Sharp) recovered from a puncture 15km from the finish to take a solid sixth place.
Italian Elia Viviani (Cannondale) could only manage tenth place in the bunch sprint and concedes the red jersey to 23-year-old Bouhanni, winner in Bari on Tuesday.
Spaniard Joaquim Rodriguez - one of the pre-race favourites - and his Katusha team-mates Giampaolo Caruso and Angel Vicioso did not start stage seven due to their injuries in the horrific crash that marred the conclusion of Thursday's stage to Montecassino.
Australia's Brett Lancaster also pulled out of the race for Orica-GreenEdge.
FIVE-MAN GROUP: Robinson Chalapud (Colombia), Jose Herrada (Movistar), Winner Anacona (Lampre-Merida), Bjorn Thurau (Europcar) and Nicola Boem (Bardiani-CSF) broke clear shortly after the start of the stage before Herrada dropped back and was replaced by the Australian Nathan Haas (Garmin-Sharp) on the Cat.3 Valico di Aricnazzo climb.
The break built up a maximum lead of nine minutes and still held an advantage of over four minutes as Haas led the escapees over the Cat.4 Valico della Somma, 39km from the finish. But the combined efforts of the teams of the big sprinters ensured that the leaders were swept up with 3km remaining, despite solo efforts by both Haas and Thurau to break clear.
BIG WINNER OF THE DAY: Nacer Bouhanni entered the Giro still in the hunt for his debut Grand Tour win - and after Marcel Kittel made such light work of the opening sprint stages in Ireland, it looked like Bouhanni's run for that elusive win would continue. But Kittel's withdraw has changed the dynamic of the battle for the red jersey, and after a gutsy solo sprint in Bari, Bouhanni showed his class with victory in Foligno.
BIG LOSERS OF THE DAY: After the fall-out of Thursday's crashes the peloton was ultra-cautious on Friday - but still a couple of riders managed to come a cropper, Italian Eugenio Alafaci (Trek) on a tight roundabout and Spaniard Fran Ventoso (Movistar) on the fast approach to Foligno.
KEY MOMENT: Once Giant-Shimano, Cannondale and FDJ started to combine on the front of the peloton after the final climb the fate of the escapees was decided. Before that, it looked like a breakaway win was on the cards. During the sprint, Luka Mezgec was perhaps too cautious and kind to Bouhanni, conceding his line on a frenetic finish.
TALKING POINT: If and when Evans takes the pink jersey on Saturday, will he ever lose it before Trieste?
COMING UP: Saturday's 179km stage eight is an undulating ride that concludes with two Cat.1 peaks either side of a Cat.2 climb. The Apennines may not be as tough as the Alps but a final section of 13% near the finish in Montecopiolo should see the GC boys come out to play - and comes after the initial ascent of Monte Carpegna, a favourite of the late Marco Pantani.
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