Serradori claimed a first-ever stage win for himself and his South African-built Century CR6 buggy in the 474km loop around Wadi ad-Dawasir.
Though he was only one of several drivers with similar frontrunning pace in the early parts of the stage, Serradori was in a league of his own in the second half of the test and finished four minutes faster than Alonso's Toyota.
The two-time Formula 1 champion nevertheless recorded his best Dakar stage finish yet, having previously been classified no higher than fourth.
The stage win has allowed Serradori to overhaul another Toyota driver Bernhard ten Brinke for seventh place in the general classification, with Serradori having surrendered the spot on Sunday after getting stuck on a dune.
Opening the road after his victory in the seventh stage - and with no bike tracks to follow given their stage was cancelled in the aftermath of the passing of veteran rider Paulo Goncalves - rally leader Carlos Sainz endured a difficult start to competition on Monday.
Over the first 150km, Sainz lost 15 minutes relative to the fastest runners, and eight relative to his nearest rival - Toyota's reigning champion Nasser Al-Attiyah.
But having been passed by both Al-Attiyah and the fellow X-raid Mini buggy of Stephane Peterhansel, and with the threat of losing his overall lead looming large, Sainz recovered and caught up to his two main adversaries, and the trio finished in close proximity.
Though he wound up 19 minutes slower than Serradori on the day, Sainz gave up just over three minutes to Al-Attiyah and six to Peterhansel, meaning he retains a 6m40s lead over the former in the general classification.
Mini driver Orlando Terranova and the Toyota pair of Giniel de Villiers and Yazeed Al-Rajhi completed the top five on the day behind Serradori and Alonso.
The trio remain in pursuit of Sainz, Al-Attiyah and Peterhansel overall, but Al-Rajhi, who sits best of the rest in fourth, remains over half an hour adrift of the marathon leader.
Another Mini driver, Yasir Seaidan - ninth in the overall standings - was in the mix for the stage win for much of the day, but lost 40 minutes after getting stuck in the sand with 50km left to run.
General classification (top 10):
|Pos.||#||Driver / Co-driver||Car||Time||Gap|
|3||302|| Stephane Peterhansel |
Giniel de Villiers
Bernhard ten Brinke
Trucks: Karginov continues to dominate
Kamaz driver Andrey Karginov has edged closer to a second Dakar Rally triumph after picking up his third successive stage win of the 2020 event.
Despite opening the road, Karginov extended his lead over the fellow Kamaz of Anton Shibalov by a further six minutes and is now almost half an hour clear in the general classification.
Ales Loprais was third on the day, while Dmitry Sotnikov and reigning champion Eduard Nikolaev - who is now competing under the 'Dakar Experience' rule after failing to finish the stage on Sunday - made it all four Kamaz trucks in the top five.
Maz driver Siarhei Viazovich's chances of challenging the runaway Kamaz pair are swiftly evaporating, with him now over an hour down from Karginov.
SxS: Lopez halves Currie's lead
Defending SxS champ Chaleco Lopez bounced back from his disastrous Sunday run to work himself back into contention for victory.
Lopez outpaced marathon leader Casey Currie - held up by a broken axle - by 16 minutes, and now only trails the American by just under that margin with four stages left to run.
Sergey Karyakin is the only other driver within an hour of Currie, having likewise taken time out of the leader on Monday.
The quickest time on the stage was set by Red Bull junior Mitch Guthrie, who was able to rejoin the rally under the 'Dakar Experience' ruleset after getting a replacement engine from squadmate Cyril Despres - who has had to withdraw for good.
Guthrie was penalised, however, allowing Reinaldo Varela to inherit the stage win.