Verstappen's fifth win of the season tightens his grip on the drivers' standings with Perez now moving into second, 21 points behind, while Leclerc slips to 34 points adrift.
Max Verstappen has extended his Formula One championship lead by winning the Azerbaijan Grand Prix after Charles Leclerc retired from the lead with an engine failure.
Leclerc started from pole on Sunday but immediately lost the lead to Sergio Perez, Verstappen's Red Bull teammate, in the first corner.
The Ferrari driver regained the lead with a smart strategy call to pit under “virtual safety car” speed restrictions while the two Red Bull cars stayed out.
Leclerc seemed to poised to challenge for the win, but the Monaco driver's car started spewing smoke on lap 20 of 51 and he had to pull into the pits. It was his second retirement in three races.
“It hurts. We really need to look into that for it to not happen again. I don’t really find the right words to describe, obviously it is very disappointing," Leclerc said.
Verstappen had passed Perez shortly before Leclerc's failure and the reigning F1 champion cruised to his fifth win of the season.
A terrible day for Ferrari
There were more late reliability concerns Sunday when Verstappen told his team the car felt odd under braking, but he was able to make it to the finish.
“I think today we had incredible pace in the car, we could really look after the tires and chip away at it and pass for the lead," Verstappen said.
“But then of course, also, maybe a tiny bit lucky with (Leclerc's) retirement. I think nevertheless our car was really quick today and could have closed that gap.”
Red Bull went 1-2 in the race with Perez finishing second, while Mercedes was third and fourth with George Russell and Lewis Hamilton.
Ferrari had a terrible day as both Leclerc and teammate Carlos Sainz Jr failed to finish, as did the Ferrari-powered cars of Zhou Guanyu and Kevin Magnussen.
It was the first time since the Italian Grand Prix in 2020 that the Ferrari team had to retire both cars.
Verstappen leads the standings by 21 points over Perez, while Leclerc dropped to third and is 34 points behind Verstappen.
Pierre Gasly was fifth for AlphaTauri and Sebastian Vettel sixth for Alfa Romeo. Fernando Alonso of Alpine held off the two McLarens of Daniel Ricciardo and Lando Norris to finish seventh, and Alonso's teammate Esteban Ocon was 10th.