World Rally Championship leader Ogier had held top spot all day until he veered off the road 7.5 kilometres into stage six, incurring a 10-minute penalty as a result.
Volkswagen's Ogier tried his best to find a way back to the intended route via another road, but the Frenchman was helpless to avoid the costly sanction.
The day had started well for the reigning champion as he ended the opening stage 0.04 seconds quicker than his Finnish team-mate.
That advantage was stretched to 2.1secs on stage two as deteriorating conditions saw the field become increasingly stretched.
Latvala gained ground as the drivers tackled Moselland for the first time, and it was here that he would later snatch top spot from his colleague.
The gap opened up once again on stage four, before Latvala clawed his way back to within 5.5secs heading into the final stage of the day in a fascinating tussle between the pair.
But it was Ogier's venture into the vineyards alongside the Mosel river that cost him the lead at the end of the day, slipping to 35th as a result.
Both Ogier and Latvala had been building up a comfortable lead over the rest of the field, but the former's crash leaves the Finn out on his own and 37 seconds clear of Citroen's Kris Meeke.
The setback could come as a blow to Volkswagen's hopes of ensuring the championship on home soil.
Ogier cannot clinch the title for himself and co-driver Julien Ingrassia this weekend, but will ensure that the world crown returns to Volkswagen if he can outscore Citroen's Mads Ostberg - currently eighth - by 10 points.
Volkswagen have a chance to retain the manufacturers' title if they can outdo Citroen by three points.
Thierry Neuville, whose car had to be rebuilt overnight after careering out of Thursday's shakedown stage, also endured a difficult sixth time of things, spending all but the opening two kilometres with smoke in his Hyundai.