Bennett timed his last effort perfectly to overtake double stage winner and hot favourite Elia Viviani (Quick-Step Floors) for the win with Niccolo Bonifazio (Bahrain-Merida) finishing third.
“It’s a big relief," Bennett said. "I was close so many times at the Giro, but today to get the timing right was key.
"It’s not easy to pass Viviani, but I knew my time would come, even there might be some people who thought it will never come. A big thanks to my team all the guys support me really well all the time.
"Today my plan was to take the wheel from Viviani instead of doing all the lead out for him like the first stages. But I needed patience because I didn’t want to be early again, and then a was closed at some point, but in the end, the timing was perfect and everybody could see how fast I am.“
An early break of three which included Davide Ballerini (Androni-Sidermec-Bottecchia), Markel Irizar (Trek-Segafredo) and Maxim Belkov (Katusha-Alpecin) road to an advantage of more than four minutes before the peloton started the pullback.
With a sprint always on the cards, the catch came with 14km remaining of the 159km route along the Calabrian coast from Pizzo to Praia a Mare.
The general classification was unchanged and Yates retained his 16-second advantage over defending champion Tom Dumoulin (Sunweb) and Mitchelton-Scott teammate, Esteban Chaves, who remained third overall at 26 seconds.
“I was a bit nervous. It was a big moment for me to wear the pink jersey, one of the biggest of my career, but it was a special day and I really enjoyed it," Yates said.
“It’s my first time leading a grand tour, but with the breakaway going away quite easy it was a bit more relaxed and a nice day."
Saturday's eighth stage sees the second mountain finish at the end of a 209km route from Praia a Mare to Montevergine.
“I know nothing of the next two stages except what is written in the book, but our directors know the climbs very well as do a couple of our riders, so for me it’s not a problem," Yates said.
“It’s a little more difficult to attack now I am in the jersey, and I need to see if I have the same legs. The first climb nerves are out of the way.
"Sometimes the first climb doesn’t go as well as expected, but then as the race goes on riders become much better so we will have to wait and see how our rivals are feeling.”