Slicks were the tyres of choice for the damp track conditions - the lengthy Shanghai circuit drying steadily after heavy morning rain - and Rossi earned his breakthrough victory after a tense race-long battle with Repsol Honda's Dani Pedrosa.
Pedrosa took advantage of some frantic opening laps to make a small break up front, before being caught and passed by Fiat Yamaha rider Rossi, who took the lead for the first time on lap 5 of 22.
But Pedrosa then matched Rossi blow-for-blow and was still just a fraction from the Italian ten laps later, when Rossi made his victory push - pumping out new lap records to finally break the
Jerez winner and take a 1.3secs lead with three laps to go.
Pedrosa later explained that there a strong tailwind along the giant 1.km back straight - which pushed up the top speeds substantially - had caused his Repsol Honda to over-rev and he was happy to settle for second under the circumstances.
Pedrosa had thus dropped rapidly away from Rossi by the flag, The Doctor taking his first victory since last September's Portuguese Grand Prix - with both fists waving in delight - by a margin of 3.890secs.
Having broken his longest losing steak since his debut 2000 season, a relieved Rossi parked his M1 at the side of the track, took off his helmet and soaked up the moment - before kissing his Yamaha and making his way slowly back to the pits.
MotoGP world champion
Casey Stoner also looked set to play a starring role, after qualifying on the front row for the first time this year and holding the lead several times in the early stages, but was forced to watch in frustration as the top two rode away from him.
The Ducati Marlboro star, who hit a staggering 343.2km/h along the back straight, finally finished 12secs behind Pedrosa and 6.5secs ahead of fourth placed Jorge Lorenzo. Stoner later revealed that a softer tyre, in response to the cooler weather conditions, had proved his undoing.
Lorenzo came into the race holding a perfect podium record and the joint world championship lead, but had badly injured his ankles during a huge Friday highside - then stalled on the grid as the formation lap began.