Dumoulin (Sunweb) clocked 50min 37sec over the 39.8km course between Foligno and Montefalco, beating Geraint Thomas (Sky) by 49 seconds and Bob Jungels (Quick-Step Floors) by 56.
Overall, Dumoulin now leads the previous leader Nairo Quintana by 2min 23sec after the Movistar rider lost a massive 2min 53sec.
“I’m not surprised to win this time trial," Dumoulin said. "The time gap is a lot, it’s more than I hoped for but, in my mind, it’s less surprising than my performance on the Blockhaus.
"Last year I lost the Maglia Rosa on Stage 8, this year I take it on Stage 10, it’s a real improvement and the big time gap makes it even nicer.
"I didn’t feel at my best ever in a time trial but it definitely wasn’t bad. I guess everyone had pain in their legs, especially in the last ten kilometres with the headwind.
"I don’t expect to gain as much time in the last day’s time trial as today but my rivals need to take some time on me in the mountains and they know it. From the beginning, my goal is to do well on GC.”
Bauke Mollema (Trek-Segafredo) moved up to third at 2min 38sec, after he leapfrogged Thibaut Pinot (FDJ), now fourth and two further seconds back at the end of a bad day.
Dumoulin will now have to hold off the expected repeated attacks from pure climbers like Pinot, Quintana and defending champion Vincenzo Nibali (Bahrain-Merida) in future stages if he is to retain the Maglia Rosa and win his first grand tour.
“We lost more time than we expected, though my legs felt well today,” Quintana said. “It was a very windy course, which also played against me, and we always had in mind that Dumoulin could make a big gain today, which he proved with an excellent performance, he's just shown how great of a specialist he is.
“He's showing also great form on the climbs, so he probably is the biggest contender for pink from now. Nibali also fared really strong, and the forces against the other main GC guys seem to be pretty much balanced. We must continue to keep an eye on everyone.
"We'll wait and see how we can build on this, seek for new strategies and gain terrain back for the next few days to try and get that Maglia Rosa back.
“It's always hard to swallow when you lose a leader's jersey, but I've got strong hopes. Our team is fantastic, I'm in good condition and, with all mountains remaining in this Giro, we must keep digging and try to bounce things back."
The 11th stage is a 161km hilly ride from Florence to Bagno Di Romagna.