The 20-year-old only decided to compete in the event at the last minute in a gesture of support to his older brother William, who committed himself to riding at the North West to pay tribute to his dad, Robert, who died following a crash during practice on Thursday.
However, William's PJ Flynn Honda seized on the warm-up lap, ruling him out of the race, but to the delight of the massive crowd on the north coast, Michael rose to the occasion as he emerged on top of a three-way scrap for the lead involving last year's winner, Christian Elkin from Macclesfield and John McGuinness on the Padgetts Racing Honda.
At the end of the race, Michael dropped to his knees as he was overcome with emotion and said he hoped his dad was "proud of me."
"It's great for a Dunlop to win. I wanted to do it for my dad and I did it.
"I'm so proud today and I want to thank everyone for their support. My dad was the best around here," he said.
"I only went out there to support William and I found myself at the front and on the last lap I thought there's no point in stopping now."
Dunlop seized the lead of the race from Elkin on the opening lap and the pair continued to battle it out throughout the four-lap race, with McGuinness briefly moving to the head of affairs at the Ballysally roundabout on the third lap. Michael's uncle, Paul Robinson, was further back in fourth position.
As they entered the final lap fans were praying for a Dunlop victory to serve as a fitting farewell to legendary racer Robert, who was the most successful rider ever around the Triangle with 15 wins.
Elkin led the way and kept his nose in front along the fast blast to University Corner and through the 'Magic' roundabout section of the 8.9-mile circuit, but the English rider had to give second best to Dunlop at the Magherabuoy Chicane as they set off on the all-important run to Metropole Corner.
As Elkin edged in front on the approach to Portrush, Dunlop made his move on the brake and slipped up the inside to the roar of the local fans.
He kept his cool along the technical Coast Road section as thousands of spectators willed the County Antrim rider to victory.
Michael made no mistake as he negotiated the final chicane at Juniper Hill and received a standing ovation as he crossed the line to claim a famous victory – his first international road race triumph – with a best lap speed of 110.55mph.
Elkin was gracious in defeat and said Dunlop fully deserved his victory.
"He was riding with his heart and you have to give it him for riding after what happened his father.
"We were both riding very hard but he got the better of me and fair play to him."
McGuinness, who claimed the final rostrum position, said the sight of the fans waving their programmes as Michael led on the final lap would live with him forever.
"My bike was good and the race could have gone either way. All three of us were riding hard but it was fantastic for Michael Dunlop to get the win and he thoroughly deserved it.
"Seeing all those fans waving their programmes all the way around the circuit is something that will stay in my mind forever."
Robinson, Andrew Neill and Saintfield's Davy Morgan rounded off the top six.
RESULTS: 1 M Dunlop; 2 C Elkin, 3 J McGuinness, 4 P Robinson, 5 A Neill, 6 D Morgan.