The 45-year-old Ballymoney publican was ready to bring an early end to his participation after a gruelling ride into sixth place in Saturday's TT Formula One race.
However, Dunlop's fourth consecutive victory in the 250cc TT, which extended his overall record on the island to 22 wins, changed his mind.
"It's a bit different for me now compared to Saturday night when I was ready to quit," the Honda rider said. "The Formula One race took it out of me and I felt my age. Now, I am ready for more wins."
Phillip McCallen, Dunlop's fellow Ulsterman, set the pace, but the Formula One race winner lost the lead with a lengthy pit-stop. He then crashed at Quarry Bends, walking away from the 150mph spill with nothing worse than a damaged ego.
Dunlop clocked 1hr 20min 18sec to win by 47sec, averaging 115.59mph over the four laps of the 38-mile Mountain Course. Ian Lougher (Honda) was second, 1.4sec clear of John McGuinness (Aprilla).
Rob Fisher, partnered by Rick Long, won the day's sidecar TT by 64 seconds from Tom Hanks and Steve Wilson.Reuse content