Rossi has won four of the five races this season

Rossi thrilled the fans at Mugello by grabbing the lead for good from his fellow Italian with two laps to go.

Loris Capirossi won a close battle with Marco Melandri for third as home riders finished in the first four places.

Melandri's Telefonica Movistar Honda team-mate Sete Gibernau slipped further adrift in the overall standings after crashing out on the seventh lap.

Rossi, who was mobbed by fans on his slowing down lap, was pleased to have put on such a show for his home supporters in one of MotoGP's most important races of the year.

It was a great battle - full of passes and full of attacks Valentino Rossi

He said: "That was an incredible race and the best possible finish for the crowd, with four Italian riders in the top four positions.

"It was a great battle - full of passes and full of attacks. In the beginning I tried to go alone but I had some problems with the front and decided just to concentrate on my rhythm.

"Then Melandri arrived and we had a great fight, also with Biaggi after that. We set a high pace to the finish, I made my attack with three laps to go and it worked so of course I am very happy."

Capirossi's Ducati Marlboro team-mate Carlos Checa was fifth and Biaggi's Repsol Honda team-mate Nicky Hayden sixth.

Alex Barros was seventh for Camel Honda and Makoto Tamada eighth on the Konica Honda.

Rossi has now won four of the five races this season on the Gauloises Yamaha, and leads Melandri by 49 points in the overall standings.

The world champion began the race on pole, but immediately dropped to fourth as Capirossi made a flying start.

Rossi hit back straight away to cruise into an early lead, and Gibernau's exit boosted his victory hopes.

Melandri led the charge and briefly took over at the front, but it was left to Biaggi to challenge Rossi in the closing stages of the race.

He managed to get past Rossi, and the two almost came together with four laps to go.

But two laps later Rossi got his nose back in front for the last time, leaving Biaggi to settle for second - his best finish of the season so far.

Capirossi overtook Melandri on the final lap to give Ducati their first podium finish of the year.

Rossi celebrated after the race by donning a mortar board to mark the honorary degree he received from the University of Urbino earlier in the week.

Daniel Pedrosa won the 250cc race on a Honda to extend his championship lead, beating fellow Spaniard Jorge Lorenzo and Alex De Angelis of San Marino.

Hungary's Gabor Tamalcsi took advantage of a wild last lap to win the 125cc race on a KTM ahead of Switzerland's Thomas Luthi and Joan Olive of Spain.