Sanchez, one of the most promising riders in the bunch, surged on the final stretch to beat Frenchman Sandy Casar, fellow Spaniard Mikel Astarloza and Russia's Vladimir Efimkin.
Despite numerous attacks in the two first category climbs of the day, which put his leader's spot in jeopardy, Italian Rinaldo Nocentini retained the yellow jersey.
The 25-year-old Sanchez, winner of Paris-Nice and six other races this season, was a stage winner on the Tour in Aurillac last year. His latest victory came on the day when his team-mate Oscar Pereiro, the 2006 Tour winner, called it quits.
Sanchez became the flag-bearer for the team after Alejandro Valverde decided against entering the Tour because he is banned from racing in Italy, with the race due to pass through Italian territory.
Sanchez decided to add Leon to his first name in memory of his older brother, also a professional rider, who was killed in a motorbike accident in 2005.
"I'm lucky to be in such a team. I dedicate this victory to my team-mates, to my father and my brother who is up there," he said.
Attacks against the Astana team of Alberto Contador and Lance Armstrong — second and third in the overall standings respectively — were expected. They took place but proved unfruitful.
"Evans and Schleck tried to attack but it was too early in the stage," said Contador.
Cadel Evans, the Tour runner-up for the past two seasons, tried his luck on the first climb of the day, the Port d'Envalira, culminating at 2,400 metres.
The Australian, who lost three minutes in the first week of the Tour, finally gave up on the descent.
Evans said other riders with him refused to help for fear of being chased by Astana: "They acted like children, telling me to get away," he said.
There was a second first category climb on the day's menu, the Col d'Agnes, and it was Andy Schleck's turn to challenge the Astana riders.
The Luxembourg climber, crowned best young rider of last year's Tour, struck twice but also failed to drop the favourites.
In the finale, Efimkin tried to break out on his own but Sanchez was the strongest and he overtook Casar near the line to grab the laurels.
"I made a little mistake but it was hard with two Spaniards in the break working together and Efimkin, who did not do any work," said Casar.
The Frenchman had reason to be bitter -- it was the fifth time he had finished second in a Tour de France stage.
Sunday's 160.5km stage to Tarbes is relatively short but features two classic climbs on the Tour, Aspin and Tourmalet. "I'm just concentrating on going through the Tourmalet," said Contador.
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