Lyon, who gradually dropped out of sight after clinching seven consecutive top-flight titles from 2002, were 17th in August after losing their first three games.
But Alexandre Lacazette's rise as a top-notch striker helped them climb up the ladder as everything fell into place for a team essentially made of home-grown players.
Eight starters in Sunday's 3-0 home win against Toulouse come from Lyon's youth academy, including France striker Lacazette.
Lacazette has scored 19 goals from 20 games, a tally last reached after 20 round of matches in the French top flight by PSG's Vahid Halilhodzic in the 1984-85 season.
Lyon have been producing some free-flowing football to leapfrog their rivals and reach a tally of 42 points from 20 games.
The road to an eighth Ligue 1 title is still a long one, however.
"I do remember where we come from. If we are less rigorous, we can expect another month of August," defender Christophe Jallet warned in French sports daily L'Equipe on Monday.
Coach Hubert Fournier said: "We can pronounce the word 'title' but we have to remain realistic."
Fournier, however, would not say the hardest part of the season was yet to come.
"We've already been through tough periods this season and the best times are coming. But we'll now have to live up to expectations," he added. "PSG has an incredible team and Olympique de Marseille have had a superb start to the season."
Marseille and PSG both lost at the weekend and dropped to second and fourth respectively, one and four points off the pace.
St Etienne are third, three points behind their arch rivals.
(Reporting by Julien Pretot; Editing by Sudipto Ganguly)
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