Arredondo finished ahead of Colombian compatriot Fabio Durate (Colombia) and Team Sky’s Phil Deignan to cement his mountains classification lead.
The general classification was also rearranged after Australia’s Cadel Evans (BMC) struggled to keep pace with his younger rivals, dropping from 3rd to 9th overall, 4min 59sec behind race leader Nairo Quintana (Movistar).
Quintana kept a close watch on second placed Rigoberto Uran (Omega Pharma-QuickStep) and Pierre Rolland (Europcar) to retain his 1min 41sec overall lead.
The 171km stage from Belluno to Rifugio Panarotta was all about the three climbs and in particular the final ascension.
After a flurry of early activity it took some time for a break to organise, with Ivan Basso (Cannondale) a surprising protagonist in getting the race started.
However it was the leader of the mountains classification, Arredondo, who was the first to crest the Passo San Pelligrino.
After Tim Wellens (Lotto-Belisol) took the intermediate sprint the 14-rider break was back together with Basso and Arredondo also in the break which held a lead of over six minutes.
The Passo del Redebus was the next challenge for the break and peloton, with both groups immediately stretching out along the lower slope.
Arredondo was again the first over the climb, adding more points to his blue jersey classification hopes before the long drop to the base of the Rifugio Panarotta climb.
The break then hit the final climb together with 6min 45sec in hand before Thomas de Gendt (Omega Pharma-QuickStep) shook himself free, with Basso committing to the chase before blowing up further up the road.
The remnants of the break, which included Arredondo, Duarte and Deignan, took over the chase to de Gendt with the catch coming with 6.2km to go.
Activity came from the peloton with 4.5km left to race as Rollin and Ryder Hesjedal (Garmin-Sharp) both made efforts to up the pace, with Quintana sticking close as Evans immediately dropped off as the elevation increased.
But the race belonged to Arredondo when he made a final acceleration inside the final four kilometres to drop Duarte and Deignan before going on to win solo.
Two minutes later the top-ten general classification riders all finished within seconds of each other, with Fabio Aru (Astana) leading Quintana across the line.
Stage 18: 171km, Belluno to Rifugio Panarotta
1 Julian Arredondo (COL) Trek Factory Racing 4hr 49min 51sec
2 Fabio Duarte (COL) Colombia 0:00:17
3 Philip Deignan (IRL) Sky 0:00:37
4 Franco Pellizotti (ITA) Androni Giocattoli 0:01:20
5 Edoardo Zardini (ITA) Bardiani-CSF 0:01:24
6 Thomas De Gendt (BEL) Omega Pharma-QuickStep 0:01:38
7 Ivan Basso (ITA) Cannondale 0:01:43
8 Dario Cataldo (Ita) Sky 0:01:59
9 Fabio Aru (ITA) Astana 0:02:43
10 Nairo Quintana (COL) Movistar 0:02:46
1 Nairo Quintana (COL) Movistar 77hr 58min 08sec
2 Rigoberto Uran (COL) Omega Pharma-QuickStep 0:01:41
3 Pierre Rolland (FRA) Europcar 0:03:29
4 Fabio Aru (ITA) Astana 0:03:31
5 Rafal Majka (POL) Tinkoff-Saxo
6 Domenico Pozzovivo (ITA) AG2R 0:03:52
7 Ryder Hesjedal (CAN) Garmin-Sharp 0:04:32
8 Wilco Kelderman (NED) Belkin 0:04:37
9 Cadel Evans (AUS) BMC 0:04:59
10 Robert Kiserlovski (CRO) Trek Factory Racing 0:08:33
SBS broadcasts every stage of the 2014 Giro d'Italia LIVE! There will be nightly highlights at 5:30pm on SBS ONE, and each stage will also be streamed live here at Cycling Central.
