Australian Casey Stoner was third for Honda.
Lorenzo had led from pole position for the first time this season with Pedrosa, still feeling the pain from recent shoulder surgery, lapping in the Majorcan's slipstream until he hit the front with four laps to go and powered away.
The victory was his first of 2011 as well as first in Portugal.
Italian Andrea Dovizioso, riding a Honda, stole fourth place from compatriot Valentino Rossi on the final straight with the two separated by just two hundredths of a second as they crossed the line.
Italian Marco Simoncelli, who had started a career best second on the grid for the Gresini Honda team, crashed out on the opening lap after also falling in Saturday's qualifying.
Lorenzo, winner of the previous race at Jerez in Spain, remained top of the overall standings after three rounds with 65 points to Pedrosa's 61.
Stoner, who won the Qatar season-opener in March, has 41 and nine-times world champion Rossi 31.
