Arbroath were the better side from the start and had the Alloa defence under severe pressure in the 12th minute.
Only good goalkeeping from Allan Creer in the Alloa goal kept the home side in the match, when he was on hand to stop a close-range shot from Jay Stein. Two minutes later Creer was again on hand to save a header from Andy Reilly.
Alloa worked hard to get back into the match and in the 32nd minute came close to an opener when Robert Sloan, who was having an outstanding match, crossed to the feet of Jamie Stevenson, but his snap shot went over the bar.
Alloa made two changes at half-time when Graeme Brown and Paul McLeod were replaced by David McGeown and Ross Hamilton. McLeod was soon in the thick of things and he came close in the 53rd minute when his well-struck shot slithered past the post with Neil Inglis in the Arbroath goal well beaten.
Two minutes later he again came close when he connected with a Hamilton cross but his header went just over the bar.
It took a moment of magic from star player Stevenson in the 69th minute to give Alloa the deserved lead that their play warranted. He cleared the ball from inside his own half to Sloan and he then ran into a goal-scoring position and connected with Sloan's cross to fire home from 15 yards out.
Arbroath never gave up the fight for survival and in the 76th minute Robbie Raeside, who had been a stalwart in the Arbroath defence, missed an open goal from three yards out when he somehow managed to put the ball over the bar.
Four minutes from time Arbroath players and fans saw their strong claims for a penalty turned away by the referee when Stein appeared to be pulled down in the penalty area.