A dramatic second day at The Oval saw India establish a 52-run advantage after 16 wickets tumbled and England's fielders squandered multiple opportunities.
The tourists reached 75-2 in their second innings, with opener Yashasvi Jaiswal unbeaten on 51 despite being dropped twice.
The day began with India losing their final four wickets for just 20 runs, dismissed for 224.
England then collapsed from a commanding 92-0 to 247 all out, with Mohammed Siraj claiming 4-86 in a superb bowling display.
Mohammed Siraj produced a stunning bowling display
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Three costly drops in the evening session undermined England's position, allowing India to build a potentially match-defining lead in this series decider.
England's opening batsmen had threatened to seize complete control with their blistering assault.
Zak Crawley struck 14 boundaries in his 64, whilst Ben Duckett's audacious 43 from 38 deliveries included a reverse scoop for six off Akash Deep and another maximum scooped over Mohammed Siraj.
Their 92-run partnership came at breakneck speed in fewer than 13 overs. However, Duckett's dismissal attempting another reverse sweep against Deep triggered England's collapse.
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Ben Duckett produced a stunning six from a reverse scoop during his 43
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Siraj then delivered a masterclass, removing Ollie Pope, Joe Root and Jacob Bethell leg before wicket during a relentless spell. Prasidh Krishna supported brilliantly with 4-62, as England lost nine wickets for 155 runs.
The match featured several fiery confrontations that required umpire intervention.
Akash Deep sparked controversy by putting his arm around Duckett after dismissing him, prompting KL Rahul to pull his teammate away.
Later exchanges between Prasidh Krishna and Joe Root proved more serious. The typically composed Root became visibly furious at something Krishna said, forcing umpire Kumar Dharmasena to step in and separate the players.
Further tensions emerged when Sai Sudharsan appeared to exchange words with England fielders following his dismissal.
England's fielding deteriorated significantly in the evening session, as Harry Brook failed to hold a difficult chance at second slip when Jaiswal edged on 20 with the ball deflecting off his hands.
The opener received another reprieve on 40 when substitute fielder Liam Dawson, replacing the injured Chris Woakes, lost sight of a straightforward catch at deep fine leg off Josh Tongue's bowling.
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Tempers flared on multiple occasions during the day, including after Ben Duckett's dismissal as Akash Deep put his arm around the Englishman
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Zak Crawley then spilled Sai Sudharsan at third slip when the batsman was on seven, though Gus Atkinson dismissed him shortly afterwards.
With India requiring just 224 in their first innings after resuming on 204-6, Gus Atkinson's morning burst appeared to have put England in command.
His 5-33 included three of the final four wickets in just 18 deliveries.
Yet India's seamers orchestrated a stunning turnaround despite being a bowler short in their selection.
Their resilience transformed what seemed certain defeat into a commanding position heading into Saturday.
England now face the prospect of a fourth successive 2-2 home draw against either India or Australia.
Without Chris Woakes, who suffered a shoulder injury and won't bowl again in this match, they require early breakthroughs on Saturday to prevent India batting themselves towards victory.