An electric display from the Bulls saw Mark Ward claim a win on his managerial debut in emphatic style.
Ollie Fearon earned a brilliant hat-trick to help stun Dynamo, who had beaten the Bulls 4-1 only two weeks previously.
The first chance came early on, as Fearon headed Liam Marsden's long throw just over the crossbar.
But the striker would soon get his name on the scoresheet, firing home into Charlie Taylor's bottom corner from 25 yards out on 19 minutes.
Dynamo almost produced a response with 10 first-half minutes remaining, as Alex Steadman's cross was diverted goalwards by Danny Gordon, forcing a save from Jason White before Liam Marsden threw himself at Steadman's rebound to keep the Bulls ahead.
Just before the break, Fearon came inches away from a first-half brace when he smashed his effort against the woodwork from a tight angle.
With just two minutes of the second period played, Fearon doubled the hosts' advantage when his header from a free-kick crossed the line before an attempted clearance diverted it firmly in off the crossbar.
A hat-trick seemed to be destiny for the forward, and it was sealed when he headed home Charlie Dawes' inch-perfect cross.
After the third goal, Dynamo began their assault on the AFC net, and almost reduced the deficit when Kyle Bryant's volley skimmed the crossbar.
Karl Demidh was left kicking himself only two minutes later, heading Ryan Robbins' cross to the back post wide from point-blank range.
It was never going to be for the visitors, with White blocking Demidh's low effort with his feet before Jack Broadhead cleared Josh Riley's strike off the line in acrobatic style.
Fearon could have even earned a quadruple when he robbed a Dynamo defender of possession, but Taylor did well to deny him at his near post.
The result sees AFC rise to 16th in the Evo-Stik NPL East Division table, with the Bulls facing a huge trip to Pickering Town on Tuesday night.
MATCH DETAILS
Final score | AFC Mansfield 3-0 Loughborough Dynamo
Scorers | Fearon (19', 48', 55')
AFC Mansfield XI | White, Marsden, Annable, D'Laryea, Lawrence, Broadhead, Dawes (K. Ward 75'), Buxton (Fletcher 81'), Fearon, Wall, Ghaichem (C)
Unused substitutes | M. Ward, Crosby
Yellow cards | Broadhead (10')
Red cards | N/A
Loughborough Dynamo XI | Taylor, Bryant, Gordon (Reittie 79'), Holmes (C) (Asamoah 61'), Foster, Keenan, Riley, Young, Demidh, Robbins, Steadman (Brown 79')
Unused substitutes | Thornberry, Oliver
Yellow cards | Robbins (86')
Red cards | N/A
Man-of-the-Match | Ollie Fearon
Attendance | 102