Poirier (23-5) rocked Gaethje with a left hand, then followed with punches until referee Herb Dean called it off at the 33-second mark of the round. The 155-pound bout headlined UFC Fight Night at Gila River Arena in Glendale, Arizona.
It was an impressive finish, especially considering Poirier's lead right leg was chewed up by leg kicks. His right eye was swollen shut from a combination of punches and inadvertent eye-pokes by Gaethje.
Immediately following the win, Poirier, 29, called for a title shot against newly crowned champion Khabib Nurmagomedov (26-0).
"This guy [Gaethje] would have died in here if Herb Dean hadn't stopped it," Poirier said. "He has no quit in him, and I respect that 100 percent.
"This is my 20th fight in the UFC. I've been knocked out, climbed back, over and over again. Two weight classes. Dana [White]! Khabib! Let's f---ing go! It's time!"
Poirier, a member of American Top Team in South Florida, has fought in the UFC since 2011 but has never fought for a title. He is 7-1 since moving up from the 145-pound division in 2015.
Saturday marked one of his most impressive victories. Gaethje (18-2), who is known for wearing opponents down as a fight progresses, targeted Poirier's lead leg with kicks from the opening bell, and that appeared to have an effect on Poirier's mobility and punching power.
Poirier refused to wilt under Gaethje's pressure, however, and responded with a blistering pace. According to Fightmetric, Poirier attempted 283 total strikes in the fight, compared to Gaethje's 199. Poirier landed 65 percent of those strikes.
The third round saw both lightweights exchange words after Gaethje was docked a point by Dean for an accidental eye-poke. A ringside doctor checked Poirier's vision, but the bout continued.
Poirier's only loss at 155 pounds came via knockout to Michael Johnson in September 2016. He has been perfect otherwise, including wins over Gaethje, Anthony Pettis, and Jim Miller. Gaethje has now dropped two in a row after beginning his career at 18-0.
Oliveira rallies to submit Condit in second round
Oliveira, of Rio de Janeiro, survived a rear-naked choke attempt from Condit late in the first round before rallying to earn the 15th stoppage of his career. He cut Condit with elbows in a scramble, hurt him with an upkick moments later and then locked in a standing guillotine that eventually ended the fight.
It's a tough result for Condit, 33, who drops to 1-5 in his past six. An Albuquerque, New Mexico-based welterweight, Condit took a 16-month break from the sport last year and has come up short in two appearances since returning to the Octagon. He has not won a fight since May 2015.
Condit's wrestling looked on point early, as he was able to reverse position on Oliveira on multiple occasions. The upkick in the second round changed the complexion of the bout, however, as Condit appeared shaken up from the blow.
Oliveira, 30, suffered a setback to Yancy Medeiros in December but has been on fire otherwise. He is 8-3 in the UFC overall.
Touted prospect Adesanya maintains perfect record
Nigerian middleweight Israel Adesanya (13-0) kept his undefeated record intact, though he was forced to go the distance for the first time in his MMA career.
Adesanya defeated Marvin Vettori (12-4-1), of Italy, via split decision. Two judges scored it 29-28 in Adesanya's favor, while one had it 29-28 for Vettori.
Before Saturday, Adesanya, 28, had finished all 12 of his professional MMA fights via knockout. He never came close to finishing Vettori but stayed ahead on the scorecards with a steady leg kick, elbows and jab. In the second round, he landed an elbow to Vettori's eye, which Vettori mistakenly took for an eye-poke.
Adesanya's striking defense was outstanding; Vettori landed just 35 percent of his attempted strikes, according to Fightmetric. Vettori had success taking Adesanya down in the third round, but it was too little, too late.
Adesanya, who trains out of New Zealand, is 2-0 in the UFC. Vettori drops to 2-2-1 in the Octagon.
Waterson edges Casey in back-and-forth bout
Strawweight Michelle Waterson (15-6) picked up a much-needed win over Cortney Casey (7-6) via split decision. Two judges had it for Waterson 29-28, while a third scored it 29-28 for Casey. ESPN scored it 29-28 for Casey.
The scores reflected how close the fight was. Waterson, who fights out of Albuquerque, New Mexico, scored several key takedowns and spent a significant portion of the fight in top position. Casey threatened to submit her with an armbar on several occasions, however, and did well defending Waterson's ground and pound.
According to Fightmetric, Waterson outstruck Casey 77-64. Casey, who is from Phoenix, appeared to land the harder shots, particularly the right hand, but she struggled to string together offense against the mobile Waterson. Waterson also scored a knockdown in the second round, with a sidekick to Casey's chest.