In the early break after 31 kilometres Gianluca Brambilla (Etixx-QuickStep) powered away solo on the final climb and descended into the Arezzo finish one minute and six seconds clear of Matteo Montaguti (AG2R La Mondiale).
Brambilla finished two minutes and 51 seconds ahead of maglia rosa Tom Dumoulin (Giant-Alpecin), who was dropped on the final climb. It was enough for Brambilla to grab the race lead.
The winning Italian's attack came at the start of the white Tuscan gravel and countered Montaguti's at 26 kilometres to go, the foot of the climb. He bridged the gap to Montaguti and the soon to be dropped Giacomo Berlato (Nippo-Vini Fantini). Montaguti was later joined by third-placed Moreno Moser (Cannondale) and fifth finisher Alessandro de Marchi (BMC).
These five were part of a 13 rider breakaway which held the lead until Montaguti's attack, their advantage three minutes and 36 seconds.
Brambilla, who finished third in February's Strade Bianche, had his sights set on the white roads.
"My idea at the beginning of the Giro was to focus on today's stage and I've made it but I cannot believe that I've done it.
"I have to thank Matteo Trentin...I was the rider who initiated the breakaway but he did most of the work until I rode away in the steep part of the climb.
"Everything is going well for me this year. The birth of my daughter Asia twenty days ago has also changed my life. It's beautiful," he said.
It was an emotional podium for Brambilla, becoming the first Italian leader of this year's race and marking the third major victory of his professional career.
“The Maglia Rosa is new to me but I’m not new among the top contenders," said the 28-year-old.
"This year, I’m more confident in my capacities. I want to do a good Giro. The Maglia Rosa wasn’t part of the plan but that’s always hard to plan, although it has always been my dream."
Brambilla will do his best to hold on to the leader's jersey in tonight's 40.5km individual time trial, but he is realistic about his chances.
"Being 58kg, I’m not exactly a time trial specialist but I did well at Barolo two years ago and tomorrow’s course is a facsimile of that one. I’ll ride flat out and if I lose the Maglia Rosa, it won’t be a drama. There’ll still be two more weeks of racing to come, and some very hard stages”. - Gianluca Brambilla