Pedersen outsprinted a pair of Australian speedsters, Steele von Hoff (Bennelong SwissWellness) and Alex Edmondson (Mitchelton-Scott), at the end of the 198.6km stage from Warrnambool to Ballarat.
"It is nice to have a victory," Pedersen said. "I was so close at the prologue and again on stage one."
Norman Hansen retained his yellow jersey with a 38th placed finish, his lead narrowing to just four seconds from von Hoff.
"I must say I felt the legs today - yesterday was hard," he said. "We also still have Larry [Warbasse] up in the general classification standings and he is climbing well. He looks good for tomorrow."
Norman Hansen was involved in an early crash but re-joined the race unhurt.
“A few guys came down right in front of me,” he said. “I clipped the rider in front of me and my bike went down, but thankfully I landed on my feet.”
After some initial jousting, a seven-rider breakaway managed to establish a lead that soon stretched to over four minutes.
The race was then neutralised near the midway point due to unfinished roadworks, and the detour at the 102.8km mark included a seven-kilometre section of gravel road.
As the riders entered this section at the 102.8-kilometre mark, the chief commissaire made the correct decision to neutralise the race in the interests of fairness and rider safety.”
The breakaway was caught as the peloton began its ascent at Buninyong with Nathan Earle (Israel Cycling Academy) and James Whelan (KordaMentha Real Estate-Australia) then taking the opportunity to lead the race over the climb, before being joined by a large final selection on the descent to the finish.
The Jayco Herald Sun Tour continues with a gruelling 218km third stage from Nagambie to Lake Mountain.