David Ripley's men must now beat Durham Jets at the County Ground and hope that one Birmingham Bears, Derbyshire Falcons and Leicestershire Foxes lose to progress to the NatWest T20 Blast quarter-finals.
The champions were never really in the game against Yorkshire Vikings, who smashed a sensational 260 for four.
Lyth underpinned the Vikings' mammoth innings with the third highest individual score ever in T20 cricket, the highest in England.
Yorkshire’s innings score, also an English record, fell just four runs short of the world record score of 263 posted by Royal Challengers Bangalore and Australia in 2013 and 2016.
The Steelbacks raced out of the blocks in reply, reaching 103 for two after eight overs as Richard Levi powered 65, but they were still left with too much to do and subsided to 136 all out in 14.5 overs.
Off-spinner Azeem Rafiq claimed five for 19 from four overs.
The Vikings jumped above the Steelbacks to second place in the North Group with their sixth win from 14 games, moving to 15 points. But they have completed their group campaign and still require other results to go their way to qualify tomorrow (Friday).
Lyth shared 127 in 9.4 overs for the first wicket with Tom Kohler-Cadmore and 121 in a further 9.1 with ex-Steelback David Willey.
Kohler-Cadmore hit 41 off 24 balls and Willey 40 off 22.
Left-handed Lyth hit 20 boundaries and seven of 13 sixes, reaching 50 off 21 balls, 100 off 50 and 150 off 66.
Against his former county, seamer Ben Sanderson’s figures of nought for 77 from four overs were the second worst in T20 history.
Levi gave the Vikings something to think about in reply, with a 27-ball half-century.
At 85 for one after six overs, the Steelbacks were actually ahead of Yorkshire’s power play score score of 80 without loss.
And they brought up their century for the loss of two wickets in the eighth over.
But they crumbled quickly from 110 for two in the ninth, with key man Levi handing Rafiq his third wicket when he found long-on.
Rafiq had earlier bowled Adam Rossington and had Josh Cobb, who was making his return from a hand injury, caught behind.
When Levi and Ben Duckett fell in the space of two balls at the end of the ninth and start of the 10th to Rafiq and fellow spinner Adil Rashid, with the latter bowled reverse sweeping, the Steelbacks were on the ropes at 110 for four.
Rafiq then got rid of Northants captain Alex Wakely and all-rounder Steven Crook in the space of three balls in the 11th over to complete his five-for before Rashid (three for 31) helped to mop up the tail as the visitors lost their last eight wickets for 26.
Yorkshire Vikings: Lyth, Kohler-Cadmore, Willey, Ballance (c), Ahmed (wk), Marsh, Rashid, Bresnan, Plunkett, Rafiq, Patterson.
Steelbacks: Levi, Rossington (wk), Cobb, Duckett, Wakely (c), Keogh, Crook, Kleinveldt, Sanderson, Gleeson, Azharullah.