Ibanez connected on a 3-1 pitch from Jason Frasor for a no-doubt drive into the first row of the second deck in right field to snap a 2-all tie.
Bautista injured his left wrist on a swing in the eighth and was removed from the game. He hit a long foul ball against David Robertson and immediately grabbed his wrist, dropping into a crouch outside the batter's box.
He walked off the field, gently supporting the wrist with his right hand after being attended to by several Toronto staff members. No further details on the injury were immediately available.
The majors' two best power-hitting teams had padded their homer totals earlier — with Yankee Stadium specials. Both Russell Martin, in the second inning, and Adam Lind, in the fourth, hit line drives into the first row of the short right-field porch.
Alex Rodriguez and Robinson Cano hit one-out singles in the eighth off Aaron Loup (0-1), recalled from the minors on Sunday. Frasor came on and hit Mark Teixeira in the foot with a pitch. Teixeira tried to fake that he jumped out of the way because the ball bounced into the stands and A-Rod would have scored. Rodriguez had advanced to second on a passed ball before Cano's hit and was on third.
Ibanez then hit his 10th career grand slam. He has been playing more because Brett Gardner has been on the disabled list since April 18 with an elbow injury and on Sunday he had his third setback in his rehabilitation.
Robertson (1-3) pitched a scoreless eighth for the win.
Cody Eppley put two runners on with one out in the ninth. The Blue Jays scored an unearned run when left fielder Dewayne Wise, a defensive replacement, misplayed J.P. Arencibia's single off Rafael Soriano, who finished for his 23rd save.
Fans hoping to see an offensive outburst from homer-happy clubs were foiled by the wild but effective outings of Henderson Alvarez and Phil Hughes.
Alvarez walked a career-high four in six innings. Hughes issued three free passes in seven innings, and each starter went over 100 pitches.
Hughes was hurt by a one-out walk to Bautista in the sixth. The All-Star slugger scored from first on Edwin Encarnacion's double that tied it 2-all.
Blue Jays manager John Farrell held a meeting before batting practice to emphasize that Monday began a stretch of six games against the Yankees and Red Sox that can help define the club's season.
How the Blue Jays finish could depend a lot on their battered bullpen, which took two big hits in the past two days. The team learned closer Sergio Santos — out since mid-April — will have season-ending shoulder surgery and lefty Luis Perez is scheduled for reconstructive elbow surgery Tuesday.
Toronto ran into problems Monday after Chad Beck pitched a scoreless seventh.
Cano extended his hitting streak to a career-high 19 games with an RBI double past a diving Bautista in right field in the third after Rodriguez lined a two-base hit to left-center to make it 2-0.
Rodriguez was moved from third base to designated hitter because he felt stiffness in his neck during batting practice. He went 2 for 4 and scored two runs.
Lind's homer to right in the fourth made it 2-1 and was the 20th of the season off Hughes, but only the first in four games.
Rajai Davis snapped an 0-for-25 slump with a one-out double in the seventh.
NOTES: Yankees LHP CC Sabathia (groin strain) makes his first start since June 24 on Tuesday. He faces lefty Brett Cecil. ... The division rivals have 15 meetings remaining this season. Toronto swept a two-game series in May. ... All five teams in the AL East were above .500 entering Monday — the latest that has happened in one division since 1995, when the AL West was in a similar position on July 3, according to STATS LLC.
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