New York has a day off before beginning a three-game series at home against the Boston Red Sox, who lead the Yankees by five games in the AL wild-card race.
Brian Roberts, Melvin Mora and Aubrey Huff homered for Baltimore, which dropped a season-high seven games under .500.
Roberts, Huff and Jay Payton each had three hits, but the Orioles stranded 13 and went 2-for-12 with runners in scoring position.
The game ended when Nick Markakis looked at a third strike from Mariano Rivera with a runner on third.
Cano hit a solo shot that traveled an estimated 425 feet off Jamie Walker (1-2), who has yielded nine homers in 31 1-3 innings this year.
Edwar Ramirez (4-1) allowed one run in 1 1-3 innings, and Rivera, the sixth New York pitcher, got four outs to earn his 31st save - the third in the series.
Baltimore trailed 7-5 in the fifth when Yankees manager Joe Girardi summoned Ramirez to face Roberts, who hit the right-hander's second pitch into the center-field bleachers to knot the score.
In a game that lasted more than four hours and featured 29 hits, neither starter got out of the fourth inning.
Bidding to go 4-0 against New York this season, Daniel Cabrera gave up seven runs, nine hits and three walks in 3 2-3 innings.
Darrell Rasner allowed five runs, three earned, and eight hits in 3 1-3 innings - his shortest start of the year. The right-hander threw 97 pitches and retired only 10 of 21 batters.
Successive homers by Mora and Huff put the Orioles ahead 2-0 in the first inning. Of the five times the Orioles have homered in consecutive at-bats this season, four have come against New York.
Cabrera relinquished the lead in the second. After Cano doubled in a run, Damon hit a drive inside the right-field foul pole to make it 4-2.
New York went up 7-2 in the fourth. Jason Giambi hit a sacrifice fly with the bases loaded before Xavier Nady chased Cabrera with a two-run double.
Baltimore answered with three runs in the bottom half, an uprising that started when shortstop Derek Jeter booted a grounder.
An error by Nady on a single to left allowed a run to score, and Huff followed with an RBI double before Kevin Millar hit a sacrifice fly.
