The British time trial champion made it into the six-rider breakaway from Giovinazzo to Vieste on stage eight, before attacking twice and finally making it away solo 17km from the line.
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Dowsett, whose contract with Israel Start-Up Nation runs out at the end of 2020, hopes the victory will help him secure a new contract for next season, as he hopes to continue his career.
The 32-year-old will become a father for the first time next year, making the stage an even more emotional moment.
Speaking with Eurosport after the stage, Dowsett said: “It’s such a tough year. All the uncertainty, working out how I’m going to get to next year and still be racing, still be doing what I love and still being able to put food on the table for three of us rather than two of us come January.
“Hopefully this will help secure something for next year. To win like that as well…as you get older you wonder when your last win might be, or your last Grand Tour or your last anything, so you learn to savour it, learn to enjoy it and enjoy it with my team-mates here and enjoy it with [partner] Chanel and my family when I get home.”
Dowsett and his Israel Start-Up Nation team-mate Matthias Brändle played a tactical masterclass from the break, with Dowsett launching the first attack 30km.
Brändle then attacked at 17km, before Dowsett kicked again and finally made it clear of the rivals.
Dowsett reached the finish more than a minute ahead of the rest of the break and looked stunned as he took his second win at the Giro d’Italia after his 2013 TT victory for Movistar.
The win is also the first Grand Tour stage for Israel Start-Up Nation, which joined the WorldTour this year.
Essex-born Dowsett said: “I think its going to be a big relief for the team to get that winner under the belt.
“The team can end this year pretty content with how things have gone so far and we’ve still got the Tour of Flanders to go and the Vuelta [a España]and a few stages here.”