Jason Kipnis homered in the first inning off David Phelps (1-2) as the Indians ended the Yankees' winning streak at five. New York came in a major-league best 22-9 since April 7.
Masterson had little trouble with a New York lineup lacking injured stars Derek Jeter, Alex Rodriguez, Curtis Granderson and Mark Teixeira. The right-hander retired the side in order four times, struck out nine and was backed by solid and sometimes stellar defense.
With Indians closer Chris Perez warming up in the bullpen, Masterson retired Robinson Cano and Travis Hafner in the ninth before Brennan Boesch singled with two outs. Masterson fanned pinch-hitter Vernon Wells for the final out as New York fell to 7-2 in one-run games.
Cleveland, which moved into a tie atop the AL Central by winning two of three at Detroit last weekend, has won 13 of 15 and is 16-5 since April 20.
The teams played the traditional, one-admission doubleheader because of consecutive rainouts last month. The Yankees stopped in Cleveland on their way back from Kansas City, while the Indians returned home for one day from a trip to Detroit and Philadelphia.
Indians right-hander Trevor Bauer was to start the second game against left-hander Vidal Nuno, slated to make his major league start.
The Yankees would have preferred a visit to the Rock and Roll Hall of Fame than an afternoon against Masterson, who allowed two infield singles in the second and a bunt in the sixth before Boesch finally grounded a ball into the outfield in the ninth. Masterson has won four of his past five decisions against New York.
New York's best scoring threat came in the second when the Yankees loaded the bases on a pair of two-out infield singles sandwiched around a walk. But Masterson struck out No. 9 hitter Alberto Gonzalez.
Kipnis put the Indians ahead in the first with his fifth homer, a 414-foot shot into the right-field seats. It could have been a two-run homer, but Michael Bourn was called out at second trying to steal. TV replays appeared to show Bourn got his foot in ahead of the tag, and he and Francona argued with second-base ump Brian Knight.
All five of Kipnis' homers have come in the first inning.
Other than that, Phelps settled in and held the Indians to four hits. He was replaced in the eighth after giving up a double and walk. Boone Logan threw a wild pitch but struck out Kipnis.