Mark Whatley struck the woodwork for Arbroath in the 29th minute, but thereafter Forfar had the better of it with Arbroath goalkeeper Ricky Gomes producing several excellent saves to deny determined David Cox an opener.
Nevertheless, the visitors snatched a crucial victory with five minutes remaining as Ryan McCord headed home from a Josh Skelly cross to send the Red Lichties third.
Second-placed Elgin City exhibited their title credentials with a comprehensive 6-0 destruction of Berwick Rangers at Borough Briggs.
Early goals from Shane Sutherland and Brian Cameron put Elgin two ahead before a quarter of an hour had been played.
After the interval, Sutherland netted his second from the penalty spot following a foul on Chris Dodd in the 54th minute, and Cameron soon doubled his tally from long-range.
Another spectacular strike courtesy of Daniel Moore handed Elgin a five-goal lead before the hosts eventually declared on six as Sutherland completed his hat-trick in the 70th minute to round off the rout.
Clyde dropped to fourth following a disappointing 2-1 loss at Montrose who move off the bottom of the table, replaced by Stirling Albion who were comfortably beaten 2-0 at in-form Edinburgh City and Annan Athletic eased to a simple 2-0 success over Cowdenbeath.