The Bavarians defeated their nearest challengers Bayer Leverkusen in the last league game of 2020 to leapfrog their opponents and move two points clear at the top of the table.
A Robert Lewandowski double saw off Peter Bosz's men after Patrik Schick's superb opening volley, ensuring Bayern are number one at Christmas for the first time in three years.
Wolfsburg complete the top four with a loss at the Allianz Arena their only domestic defeat of 2020/21.
A 2-1 deficit to this year's surprise package Union Berlin on Friday made it four defeats in Borussia Dortmund's last five Bundesliga games and saw them fall to fifth in the table, eight points behind the league leaders.
Union's win over BVB was their first in four matches and saw them move to within one point and one place of the 2012 champions.
At the bottom of the table, the two automatic relegation places are looking like they may already be decided.
If Die Konigsblauen fail to pick up a win in their next two league outings, then they will equal the league record of 31 games without a victory.
Their six-point haul has them four behind newly promoted Arminia Bielefeld, who will occupy the relegation playoff place over the winter break, and five behind 15th placed Koln.
Hertha Berlin have been this year's biggest underachievers, with the capital club's new ambitious owners being overshadowed by their less affluent city neighbours.
Bruno Labbadia is coming under increasing pressure at the Olympiastadion, with his side currently occupying 14th position despite a sizeable investment over the last 18 months.