The Liquigas rider, Giro winner in 2006 before a ban for attempted doping stalled his career, is back to his very best and showed sustained stamina to rip the pink jersey off Spain's David Arroyo on the 19th stage.
Italy's Michele Scarponi triumphed on the day but Basso and team mate Vincenzo Nibali were only just behind having boldly attacked on the Mortirolo, 40 kilometres from home and with another peak in the way.
Basso leads Caisse d'Epargne rider Arroyo, who had been in command for five stages, by 51 seconds with Italian Nibali lifting himself up to third spot overall with a two minutes 30 seconds deficit.
Despite the steep climbs and patches of snow in the mountains on the 195 kms from Brescia, Basso looked surprisingly fresh as he pumped his thighs and stared ahead with steely determination.
The Italian was urged on by teammate Nibali, even if he too has an outside chance of overall victory having been a late entry at the Giro after Franco Pellizotti was withdrawn because of a doping probe.
Basso is unperturbed by having a rival also challenging for the title.
"It's fine to talk about this alliance as particular but there is no problem. We have the intelligence to understand how to race," Basso, who renewed his contract with Liquigas for two years on Thursday alongside Nibali, told reporters.
Saturday's penultimate stage is also in the mountains of northern Italy with the fearsome Gavia peak an especially nasty surprise for the riders.
Snow continues to be a problem there even in late May but organisers hope the original 178 km route to Ponte di Legno-Tonale can be used without diversions.
This year's Giro, without top names Alberto Contador and Lance Armstrong, has been so topsy-turvy that Basso is far from celebrating a premature victory ahead of the final time trial in Verona on Sunday.
Wind, rain, crashes and shock breakaways have dominated the three-week race, which began in Amsterdam.
