A lacklustre first half, which included conceding a sixth-minute goal, was followed by a rousing second half that consigned Canterbury to the NZFC's bottom slot.
The win puts Otago in fifth place and on track for a slot in the top-four play-offs, which is coach Terry Phelan's stated target for this season.
Canterbury made that target appear a long shot when speedster Michael Fifii raced through the Otago defence and, despite Tim Horner's last-ditch tackle, hammered the ball against the crossbar.
Young midfielder Ryan Faichnie collected the rebound and beat keeper Liam Little to give Canterbury a 1-0 lead after just six minutes.
Obviously rattled, Otago struggled for composure and opted for long balls forward that were meat and drink for Canterbury's powerful central defence.
The high passes allowed Bill Robertson, in particular, to flatten Otago's smaller forwards, and in its best spell of play Canterbury looked a polished unit.
But as Canterbury coach Korouch Monsef later ruefully acknowledged: "We should have scored more goals then, when we were playing well."
After the break, Otago took control via increased dominance in midfield from Andy Coburn and Barry Gardiner, while Aaron Burgess, Tom Jackson and Dave Dugdale swarmed in attack.
Otago pressure led to territorial advantage that resulted in a string of corners and free-kicks, and also gave Jackson a chance to use his prodigious throw-in.
The long throws especially upset Canterbury's defensive shape, and keeper Chris Sinclair, who was preferred to regular keeper Adam Highfield, had to punch several looping throw-ins from under his crossbar.
Of many strong efforts at goal, Otago captain Colin Falvey went closest with a couple of strong headers, while Coburn also nearly scored as the visitors' defence came out and the Otago midfielder launched a strong header over the Cantabrians.
Dugdale's equaliser came from a well-worked left-wing attack that produced a far-post cross, and in a twisting leap the Englishman beat both James Reichwein and keeper Sinclair to score.
Apart from some Canterbury breakaways and free-kicks, Otago dominated the rest of the match, but another goal looked unlikely. It took an inspired run forward by defender Rhys Henderson, who, in the final minutes, worked his way into the heart of Canterbury's penalty box where he was bundled off the ball and referee Chris Kerr had no hesitation in pointing to the penalty spot.
Dugdale calmly slotted his spot-kick past a good dive by Sinclair, and the Otago celebrations started almost immediately, after the final whistle blew.
Phelan was pleased. "The second half was a great improvement. There was no hysterics at half-time, we just asked the players to remain positive.
"It's great to win and move up the table, but we have tons of work ahead to try and retain more-controlled ball possession, and that's what we will be working on in midweek before we play Manawatu next weekend at Sunnyvale."
