Having qualified on pole for a perfect third time in a row, Lorenzo lined up on the front of the Estoril grid with sporadic rain drops falling - adding further drama to the proceedings - before fellow front row starters Pedrosa and Rossi stormed ahead of him into turn one.
Rossi wasted no time in shuffling ahead of world championship leader Pedrosa, with Lorenzo also taking advantage - then passing the fellow Fiat Yamaha of Rossi to take the lead by the end of lap one.
Rossi soon struck back, passing Jorge into turn one of lap 2 of 28, and the 20-year-old was demoted back to third position on lap 11 when Pedrosa finally made a move stick into the same corner.
Lorenzo had been unable to stick with Pedrosa and Rossi just two weeks' earlier at his home grand prix, but the youngest rider on the MotoGP grid - who repeatedly warns that he'll keep getting better - went on to beat Pedrosa on the brakes into turn one, then surprised Rossi by diving for the lead into the ultra-tight chicane later in the same lap.
The top three were thus covered by just 0.4secs as the grand prix entered its second half, but Rossi - who had hoped to fight for his first Bridgestone victory - was now struggling to match the Michelin-shod Spaniards, Pedrosa overtaking the 2007 event winner on lap 15.
But Dani couldn't stick with Lorenzo, who - despite arm pump problems at the first two rounds - quickly put his M1 just out of reach of the factory Honda rider and maintained at least a one-second lead.
Lorenzo rode flat out to the finish line, before erupting in celebration - while Pedrosa was left punching the tank with frustration just behind him.
Lorenzo and Pedrosa are now equal at the top of the world championships standings, while Lorenzo has become the youngest ever to take three successive podium finishes in the premier-class... taking the record from Pedrosa by just one day.
Jorge celebrated his achievement by planting his trademark 'Lorenzo's Land' flag for the first time as a MotoGP rider, then danced his way onto the podium before leaping high into the air.