Bennati used all his experience to draw level with Team Sky's Swift in the final straight of the 204.5km stage from Aguilar de Campoo and throw his bike over the line with an all-important lunge to take his first win of the season - and the sixth Vuelta stage win of his career.
The 31-year-old RadioShack rider dedicated his win to the late Wouter Weylandt, with whom Bennati rode at the Leopard-Trek team before the Belgian was tragically killed during the 2011 Giro d'Italia.
"This win is for Wouter Weylandt who won here four years ago," an emotional Bennati said before mounting the podium.
Australian Allan Davis (Orica-GreenEdge) took third place in a fast finale ahead of France's Lloyd Mondory (Ag2R-La Mondiale), who had launched from far out.
Four-time stage winner John Degenkolb (Argos-Shimano) was poorly positioned as he entered the final straight and the German youngster was unable to add to his stunning sequence of stage wins.
There was no change in the general classification, where Spain's Alberto Contador (Saxo Bank-Tinkoff) leads Alejandro Valverde (Movistar) by one minute and 52 seconds and Joaquim Rodriguez (Katusha) by 2:28 with three stages remaining.
The longest stage in the 67th edition of the Vuelta was animated with an attack right from the outset, with Spaniard Luis Angel Mate (Cofidis) breaking clear with Dutchman Martijn Keizer (Vacansoleil-DCM) and Latvian time trial champion Gatis Smukulis (Katusha) inside the opening kilometre.
Having soon been joined by Spain's Gustavo Cesar (Andalucia) and American Brent Bookwalter (BMC), the leading quintet of riders carved out a lead of more than four minutes over the peloton.
Argos-Shimano and RadioShack controlled the tempo on the front of the pack, and the break was swept up inside the final 20km - but not before a heavy crash in the peloton brought about the withdrawal of Bennati's team-mate Linus Gerdemann.
The German rider seemed to collide with a traffic cone 33km from the finish while the peloton was in full chase. Carlos Quintana, the Colombian team-mate of Movistar's Valverde, also hit the deck but was able to continue the race.
Team Sky set a furious pace as the peloton entered Valladolid. With British GC hope Chris Froome now almost 10 minutes behind Contador in the overall standings, the British team looked to save their race with a much-needed stage win for their sprinter Swift.
British national champion Ian Stannard led Swift on the front of the pack around the final tight bend inside the closing 500 metres - and after Mondory launched early, it looked like Swift was on course for his first ever stage win in a Grand Tour.
But the 24-year-old eased up towards the finish and was eventually outdone by a resurgent Bennati's superior lunge over the line.
"I've had a pretty hard year because of illness and I didn't prepare for the Vuelta as well as I wanted. But this makes up for it," said Bennati before remembering Weylandt, who won stage 17 of the 2008 Vuelta when the race last visited Valladolid.
The Vuelta continues on Friday with another largely flat 178km ride from Panafiel to La Lastrilla ahead of Saturday's showdown stage through the Sierra de Guadarrama mountain range, which concludes atop the fiercely steep Bola del Mundo.