Second-placed Arbroath passed up the chance to narrow the gap after they were held to a 0-0 draw at home to seventh-placed Montrose.
Forfar, seeking a fourth straight win, were 2-1 down when Stuart Malcolm was sent off with half an hour to go.
But Gavin Swankie popped up with his fourth goal in three games.
David Cox had fired Forfar into an 18th-minute lead, but Chris McLeish equalised from close range a minute later.
Darryl McHardy's close-range strike put Elgin ahead five minutes before the break.
When Malcolm was shown a second yellow card after 60 minutes, Elgin looked odds on to end Forfar's eight-game unbeaten run against them.
However, midfielder Swankie slotted an equaliser from point-blank range five minutes later for a Forfar side seeking their fifth straight win over their hosts.
It ended a disappointing festive period for Elgin, who lost 3-2 to Arbroath last week.
Arbroath manager Dick Campbell had signed Bryan Hodge, who had played for him at Forfar, before kick-off against Montrose after the midfielder's release by Stirling Albion.
There was no sign of the 29-year-old in the starting line-up, however, as the home side fell short in their pursuit of a fourth straight victory.
They had to make do with a third straight draw against a Montrose side who have had their own recent revival and are now unbeaten in four games.
Forfar Athletic retained their seven-point lead at the top of Scottish League Two despite ending a 2-2 draw with third-top Elgin City with 10 men.