Bennett was the last to launch his sprint but the Irish rider managed to edge out Elia Viviani - who won two of the opening three stages - and claim his first win in a Grand Tour.
Simon Yates (Mitchelton-Scott) maintained his lead in the overall classification 16 seconds ahead of Tom Dumoulin (Sunweb) and 26 seconds ahead of teammate and stage 6 victor Esteban Chaves.
"It's unbelievable. This is the best start for the Giro d'Italia", said Chaves on the finish line.
In the General standings substantial rearrangements did not happen - the second day in a row the pink Jersey was retained by the representative of "Mitchelton-Scott" Simon Yates.
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Dennis' defeat was far from decisive, however, as the rider bearing the maglia rosa since Tel Aviv in Israel on Stage 2 crossed the line a relatively minor 1:04 behind stage victor Esteban Chaves (Mitchelton-Scott).
The 26-year-old became only the fourth Briton to wear the maglia rosa - pink jersey - in the history of the race - joining the company of Mark Cavendish, Sir Bradley Wiggins and David Millar for that honour. "I looked across the road and everyone was looking at each other".
Dennis has repeatedly said that he is using the 2018 Giro to test his limits in terms of being competitive in the overall classification of Grand Tours, and, although no longer in the lead, given his all-round performance on Thursday, he was upbeat about continuing to do that long-term. "I just had to get that wheel, and have a bit of patience as well".
He employed interesting tactics to claim the win, preferring to eschew his leadout riders for a spot on the wheel of big favourite, and two-time stage victor already, Elia Viviani. I think also I'm in the king of the mountains jersey - it's like a dream.
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Bennett is the first Irish victor of a Giro d'Italia stage since Stephen Roche in 1987.
In second place was Simon Yates (Mitchelton Scott) who moved into the top spot of the General Classification.
"I feel relieved", was an emotional Bennett's first reaction.
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