Lancs resumed on 323-8 and Stephen Croft continued with his overnight form to finish 89 not out as Imran Tahir and Neil Carter took the remaining wickets.
That set Warwicks a first innings total of 354 to better but Glenn Chapple was in good form with the ball.
Skipper Ian Westwood was out with only two runs on the board, Darren Maddy went with the score on ten, followed by Trott, Bell, Clarke and Troughton to leave Warwicks in deep trouble on 22-6.
Neil Carter did his bit, making 69 not out from 77 balls, hitting nine fours and two sixes but with no other Warwickshire batsman making it into double figures, Warwicks crahed to 113 all out.
Lancashire opted to bat again and Andrew Miller took the wicket of Sutton for one. Miller went on to take the wickets of Moore, Prince, Croft and Smith as the visitors struggled in the second innings.
Darren Maddy took a brace and Rikki Clarke got in on the act as Lancs closed on 152-8 some 393 runs ahead.