India, at tea on the third day, were 419 for six, a first innings lead of 221, after Tendulkar had made 91 and Ganguly 79.
VVS Laxman was 37 not out and Anil Kumble unbeaten on one.
India, who had held on for a draw at Lord's with just one wicket standing in the first Test of this three-match series, were 338 for three at lunch.
'The Little Master', who during the course of his innings had become only the third batsman in Test history to score 11,000 Test runs, went into the 90s in the first over after lunch when he uppercut Paul Collingwood for four.
But the medium-pacer, in his first over of the day, had the last laugh when, with his sixth ball, Tendulkar was lbw padding up outside off-stump for 91 to a ball that looked as if it might miss the stumps.
Australia's Simon Taufel, the ICC Umpire of the Year for the last three years, took his time over the decision before giving Tendulkar out.
The disbelieving Tendulkar laid himself open to a charge of showing dissent by lingering in his crease for several seconds before finally walking off with India on 342 for four.
He batted for more than four hours, facing 197 balls with a dozen boundaries and put on 96 in 31 overs with Ganguly.
Laxman edged left-arm quick Ryan Sidebottom just short of Andrew Strauss at first slip when on 16.
But there was no mistaking the batsman's authority when he pulled Collingwood, not quick enough to pitch short, for four.
But Anderson had a wicket when Ganguly, shaping to leg-glance, was caught by diving wicket-keeper Matt Prior off what appeared a thin deflection at best.
However, Taufel was in no doubt and Ganguly's 156 ball innings, featuring a six and 12 fours was at an end. The left-hander put on 67 with Laxman.
Then 409 for five became 414 for six when Sidebottom, who'd bowled well without reward, saw his luck change when he had dangerman Mahendra Singh Dhoni caught behind for just five.
Openers Dinesh Karthik (77) and Wasim Jaffer (62), consolidated the advantage India's bowlers had created on Saturday by dismissing England for 198 with a first-wicket stand of 147.
Brief Scores (at tea, D-3):
England Ist innings 198 Vs India Ist innings 419 for 6 (Tendulkar 91, Ganguly 79, Karthik 77, Jaffer 62, Laxman 37 n o, Dravid 37; Panesar 2 for 85, Tremlett 1 for 59, Sidebottom 1 for 67).