The Frenchman emerged from the monster 33.2km Pyrgos test with an extended 19.0sec advantage over Thierry Neuville, who climbed from fourth to seize second overall.
But the smiles were short-lived as the alternator belt on Loeb's Puma failed between the flying finish and stop line - leaving the Frenchman to freewheel a few metres down the road before setting about repairing the issue.
Despite the frantic efforts, he and co-driver Isabelle Galmiche were unable to gain access to the faulty belt and could go no further. They have retired for the day, making Hyundai i20 N star Neuville the new rally leader.
Pierre-Louis Loubet's podium hopes disintegrated as the Puma hotshot plummeted from third to ninth overall with a front left puncture, while championship leader Kalle Rovanperä also hit trouble. The Finn sideswiped a tree which caused heavy damage to his Yaris' rear-end and dropped over six minutes.
Ott Tänak brings up the rear of a Hyundai 1-2 18.6sec down on Neuville, while Esapekka Lappi fills the final podium spot 3.9sec behind in a Yaris.
• Full coverage from Acropolis Rally Greece is available on WRC+ All Live here, including every stage broadcast as it happens as well as key interviews, features and expert analysis from the service park.
Finland
Italy
Hungary