The Aidan O'Brien-trained colt had set the pace for Churchill during his English and Irish Guineas triumphs earlier in the year, but Lancaster Bomber was last seen when finishing a close-up sixth in the Sussex Stakes back in August.
One of two runners for O'Brien along with Deauville, Lancaster Bomber was settled in midfield through the early stages before Wayne Lordan launched his challenge with around two furlongs to run.
World Approval, who had raced prominently throughout under John Velazaquez, had already flown by that point and Lancaster Bomber could not catch him, being beaten two and a half lengths at the line.
Winning trainer Mark Casse said: "As long as he's healthy, we are going to the Breeders' Cup. Am I confident we can win? I don't think I would change places with anybody."
Lordan was pleased enough with Lancaster Bomber's effort, but felt a stronger pace may have helped his mount.
He said: "I thought the race was run really steady for my horse. He quickened well and got to the line well. He ran a good race. He finished out good.
"Maybe a stronger pace might have helped, but he ran a good, solid race."
David O'Meara's Mondialiste won the race in 2015 but was fourth this time with the David Simcock-trained Arod and Dutch Connection for Charlie Hills finishing out of the frame.
Hawkbill lost out in a tight finish to the Northern Dancer Stakes
The other Grade One on the card, the Northern Dancer Stakes, saw Charlie Appleby's Hawkbill lose out to Johnny Bear in a photo finish.
Hawkbill set the pace under Colm O'Donoghue in the 12-furlong heat and he looked to have victory in the bag before Johnny Bear swooped late and fast for jockey Luis Contreras and trainer Ashlee Brnjas.
Coming up just a head short, O'Donoghue told www.woodbineentertainment.com: "(Hawkbill) travelled well and moved great. He hit the line strong and it was a bob of the heads, and unfortunately, it didn't go his way.
"The other horse coming encouraged him to go forward again. I thought he would have held, but that's how it goes."