The Cannondale rider thrived as he took the win in Al Bustan, with Tony Gallopin of RadioShack-Leopard in second on the 146km route from Fanja in Bidbid.
Martin Elmiger of IAM finished in third place, as Sagan not only celebrated the stage win, but also taking the overall lead in the race.
There was a breakaway of two riders early in the day - Bobbie Traksel (Champion System) went for the second day in a row, joined by Japanese rider Tomohiro Kinoshita. The pair got as far as 6:20 clear of the field, but could not hold on as the stage headed into the hills.
With 38km left in the stage, their advantage had been whittled down to four minutes. Traksel was the first to give up on a stage win with 24km to go, but Kinoshita went on alone before being brought back into the peloton on the final intermediate sprint.
Marcel Kittel, the race leader going into the stage, was one of the riders to fall off the bunch as the route went up the Al Jissah climb, but Sagan's strength and pace was unrivalled among the 50 riders went through in group heading together to the finish.
Wednesday’s stage will see the riders negotiate the 190km route from Nakhal Fort to Wadi Dayqah Dam.
The race has attracted a number of big names including Bradley Wiggins, Chris Froome, Alberto Contador, Cadel Evans, Vincenzo Nibali and Joaqium Rodriguez who are expected to shine on stage four and the ascent of Green Mountain.
But Tour de France champion Wiggins lost 1:21 on the opening day after a late crash caused a split in the peloton.
Peter Velits won the third staging of event last year and returns to defend his title in the six-stage event which is rated at 2.1 on the UCI Asia Tour.