After a first lap of 133.37mph on his Hawk Racing BMW, Dunlop bettered that with 133.39mph on lap two, in a time of 16 minutes 58.25 seconds.
For the Ballymoney rider, it was his 12th success at the event and his third in the Superbike race.
Dunlop, 27, beat Ian Hutchinson by 19 seconds, with John McGuinness in third.
McGuinness was 54 seconds behind Yorkshireman Hutchinson.
"The bike never missed a beat and it's great to be a winner again," said Dunlop, who becomes the fourth most successful solo rider at the annual races.
"After two laps, I just got into a groove and kept it steady. It was all about bringing the bike home.
"This wasn't a big factory set-up with a big budget, it was a bike built in a small workshop, but the guys did a brilliant job."
Dunlop set the pace from the start and had built up a 3.5-second lead over Tyco BMW-mounted Hutchinson by the end of the opening lap - that despite Hutchinson also being inside John McGuinness' year-old course lap record with a speed of 132.89mph.
The Northern Ireland rider continued to extend his advantage and was more than one minute inside the race record when he took the chequered flag.
English trio Peter Hickman, Dean Harrison and Michael Rutter made up the top-six leaderboard, with Australian David Johnson seventh, riding a Norton, and New Zealand's Bruce Anstey eighth.
Leading Manx hope Conor Cummins retired on the opening lap at Ballaugh and William Dunlop parked up with a mechanical problem on lap three.
Michael Dunlop set a new absolute lap record and recorded the first sub 17-minute lap in winning the opening Superbike race at the Isle of Man TT.