After a win for Surrey earlier in the day, the Red Rose needed to reach a target of 304 in 39 overs at Lord's to keep their slim hopes of survival alive.
It was a task which proved beyond them as they were bowled out for 194 with former Lancashire bowler Steven Crook finishing with five for 48.
Lancashire had hoped to bowl out Middlesex in the afternoon to give themselves realistic victory hopes but the hosts dug in before declaring on 305 for nine at tea.
Dawid Malan top-scored with 95 with captain Chris Rogers scoring 86. Middlesex's win lifted them to second in the table but having completed all their games.
Lancashire looked doomed after the other side threatened with the drop, Surrey, pulled off a 195-run triumph over third-placed Nottinghamshire across London at the Kia Oval.
Notts began the day needing 347 for victory with all second-innings wickets in hand but collapsed to 151 all out as Surrey captain Gareth Batty took four for 30.
The visitors made a steady start, reaching 54 for one, but the introduction of spin proved their undoing with Kevin Pietersen also claiming two for 24.
Somerset are now well-placed to finish runners-up to champions Warwickshire after leaping up the table with an impressive five-wicket success over Sussex at Hove.
James Hildreth hit an unbeaten 101 and Peter Trego an explosive 89 not out in an unbroken stand of 168 as Somerset, who lost just one wicket all day, powered to victory at 397 for five. Alex Barrow (40) was the man to fall as Somerset completed the second-highest successful run chase in their history.
In Division Two, Kent put themselves right in the frame for promotion with an emphatic win over rivals and long-time leaders Derbyshire at Canterbury.
Darren Stevens and Matt Coles took seven wickets between them as Derbyshire, needing to bat out the day to put themselves within touching distance of promotion, slumped to 181 all out and a 222-run loss.
Only Usman Khawaja (53) offered any resistance for Derbyshire, who despite the defeat still went back to the top of the table, but with rivals breathing down their necks.
Hampshire's hopes of promotion were all but ended as they slipped to defeat by 122 runs to Essex at the Ageas Bowl.
Jimmy Adams carried his bat for an unbeaten 139 but it was not enough as his side fell away to 302 all out.
Hopes were alive as Adams put on 160 with Liam Dawson for the fourth wicket but none of their colleagues could muster more than 15. Reece Topley and Ryan ten Doeschate finished with three wickets apiece.