The maverick forward, back in form after nightmare spells at Liverpool and AC Milan, scored his sixth league goal of the season and was involved in two others as Nice took their unbeaten run since the start of the season to 11 matches.
Wylan Cyprien scored a brace and Alassane Plea also netted while Emiliano Sala replied for the visitors at the Allianz Riviera, as Nice played with panache and incision.
"We deserved to win but we had some difficult moments, particularly early on," said Nice coach Lucien Favre.
"Nantes had two good chances and if they had scored at that time, things might have been different."
Favre made light of Nice's six-point championship lead over Monaco and Paris Saint-Germain, adding of Balotelli: "He had a full week of rest (after injury).
"But I say and repeat: there is still much work for him to do. Today he did some extra defensive work, which is positive."
The league leaders were slow out of the blocks but soon began to take control of proceedings, with Balotelli, 26, at the heart of it as they opened the scoring.
The Italy star ran on to Younes Belhanda's chip over the top and although he was stopped in his tracks by desperate last-gasp defending, the ball broke to Cyprien to slot into the empty net on nine minutes.
Nice were piling on the pressure and the Nantes backline cracked again asBalotelli ran onto a long ball from Jean Seri and calmly took a touch before placing the ball past Remy Riou and into the bottom corner.
Nantes weren't completely out of contention and Yacine Bammou should have done better than fire over from Lucas Lima's cross 10 minutes before half-time.
Nice kept coming, though, and Ricardo Pereira's goal-bound shot was blocked by defender Diego Carlos.
But the hosts shot themselves in the foot at the start of the second period as Mathieu Bodmer tried to dribble the ball out of defence on the edge of his box.
He was robbed by Sala, who stroked a sumptuous shot into the top corner on 47 minutes.
Suddenly Nice were reeling and struggling to hold on against a rejuvenated Nantes, with Sala and Mariusz Stepinski spurning good chances.
But the tide turned again on the hour mark as Plea rose ahead to head home Seri's corner.
Minutes later a sublime flick from Balotelli sent Pereira scampering towards goal and he pulled the ball back for Cyprien to drill home.
Second-placed Monaco lost ground in the title race with a 1-1 draw at Saint-Etienne on Saturday.
Kamil Glik put Monaco ahead after five minutes but the hosts pulled level just 13 minutes later through Loic Perrin.
Champions Paris Saint-Germain are behind Monaco only on goal difference after winning 1-0 at Lille on Friday night thanks to a goal from Uruguay forward Edinson Cavani.
Rudi Garcia is still looking for his first league win as Marseille coach after his side drew 0-0 with Bordeaux at the Stade Velodrome in his first home game.
Marseille remain mired in mid-table in 10th.
