The Yankees made a one-day stop Monday in Cleveland to make up two games postponed because of poor weather in April. The win in the first game marked the Indians 13th win in 15 games and broke the Yankees' five-game winning streak.
Masterson (6-2) allowed four singles and three walks while striking out nine, including getting Vernon Well swinging to end the game. It was his third career shutout.
He retired the first five batters he faced but the Yankees used two base hits and a walk to load the bases. Masterson responded with a six-pitch strikeout of Alberto Gonzalez.
New York managed just two hits, one of which came with two outs in the ninth, the rest of the way.
Cleveland had only five hits but the first one produced the game's only run as Jason Kipnis connected in the first inning for a high, long drive into the right-field seats for his fifth home run.
That put the loss on David Phelps (1-2), who allowed four hits and five walks over 6 1/3 innings. He also struck out seven.