Spaniard Carlos Sainz secured a podium spot in third in his Ford, more than a minute adrift of the winner after Subaru driver Richard Burns was forced out with steering and engine problems at the end of stage 20.
Peugeot driver Gronholm is now four points behind championship leader Burns in the drivers' standings with six events remaining.
Delight
It was the second win of the season for the 32-year-old Finn and he was delighted with his performance.
"It is a great result in terms of the title and I want to keep the pressure on. The car was superb throughout the rally and I think we fully deserved this win."
Scot McRae also closed the gap on the championship leader after Burns, in a Subaru, was forced to retire while in third position.
A despondent Burns said: "I'm absolutely gutted and it's a bad result for me. The championship has now closed right up and I will have to push hard for the rest of the season.
"I've lost my points cushion and now it will become a big fight for the rest of the season."
Resurgent Scot
McRae's hopes of overhauling Gronholm were dashed when he spun on the tricky gravel roads, but he remained in upbeat mood: "I'm delighted with second because it makes the situation very interesting in both championships and maintains our great run through the middle part of the season," said the 31-year-old.
"If we maintain this kind of form for the second half of the year then we will be in with a great chance of championship success in November on the final round in Britain.
"The spin gave Marcus a 10-second cushion and created a minor gear selection difficulty for us so we had to be careful.
"The rally was certainly winnable but we just slid ever so slightly off line and reached the point of no return. It is very easy to do that on these stages."
1. Marcus Gronholm (Finland) Peugeot three hours 45
minutes 13.4 seconds
2. Colin McRae (Britain) Ford 14.5 seconds
behind
3. Carlos Sainz (Spain) Ford 1:18.4
4. Petter Solberg (Norway) Ford 3:00.7
5. Kenneth Eriksson (Sweden) Hyundai 3:12.7
6. Possum Bourne (New Zealand) Subaru 6:54.6
7. Manfred Stohl (Austria) Mitsubishi 11:52.0
8. Cody Crocker (Australia) Subaru 12:01.2
9. Geof Argyle (New Zealand) Mitsubishi 12:47.4
10. Gustavo
Trelles (Uruguay) Mitsubishi 13:38.3
1. Richard Burns, Britain, Subaru 38 points.
2. Gronholm 34.
3. McRae 30.
4. Sainz 27.
5. Tommi Makinen, Finland, Mitsubishi 23.
6. Juha Kankkunen, Finland, Subaru 18.
1. Subaru 58.
2. Ford 57.
3. Peugeot 41.
4. Mitsubishi 29.
5. Skoda 8.
6. Seat 7.