The Blues were 48 points down late in the second quarter after an early Essendon onslaught, yet rose to win 18.17 (125) to 17.20 (122).
The Carlton half of the 64,710-strong crowd erupted like it was a Grand Final win when the final siren sounded, while the shattered Bombers players sunk to the ground in despair.
The performance was Carlton's greatest turnaround in the club's history and one of the greatest in league history - there have only been 14 higher.
Full-forward Brendan Fevola booted eight goals in arguably one of the greatest performances of his career, including four majors in the third quarter when Carlton made their charge, to spearhead a stirring win.
Captain Lance Whitnall also began to play his part with some important touches in the third quarter after his shocking start to the season continued into the first half, when he spent much of that period on the bench.
Creative half-backs Ryan Houlihan and Heath Scotland were torched early during an Essendon avalanche, yet bounced back in the second half to be instrumental in the victory.
Essendon captain Matthew Lloyd kicked five goals, while his teammate Mark McVeigh took an early contender for mark of the year, with a huge grab over Bret Thornton.
Almost every play was crucial in a frantic final quarter, as players from both sides laid inspiring tackles and rose to the occasion.
Essendon can rue bad finishing in the first quarter, when the Bombers had Carlton at their mercy, for keeping their rivals in the game.
The Bombers dominated the first term as Scott Lucas ran riot in the forward line, yet he and Jason Winderlich missed several easy shots in a score line of 7.9.
Even that should have been enough, as Lloyd extended the Bombers' lead to 44 points in the opening minute of the second quarter.
Carlton looked gone later in the quarter, when Houlihan was penalised for a push in the back and then conceded a 50-metre penalty for backchatting the umpire, which gifted Andrew Lovett a goal.
Essendon's lead then stood at 47 points and another behind stretched it to 48.
But the Blues kicked the last three goals of the half and then slammed on seven goals in the third quarter, and hit the front for the first time at the 22-minute mark when Fevola unloaded from 45 metres.
Fevola then rose again in the final quarter, when he completed a superb mark while falling to the ground and then kicked truly at the 22-minute mark to put his side more than a goal up.
CARLTON 2.1 8.7 15.11 18.17 (125)
ESSENDON 7.9 12.13 13.16 17.20 (122)
Goals
Carlton: B Fevola 8 M Lappin 3 B Fisher 2 A Walker A Carrazzo E Betts R Houlihan N Stevens.
Essendon: M Lloyd 5 S Lucas 3 A Lovett 3 M McVeigh 3 A Monfries J Watson A Davey.
Best
Carlton: B Fevola H Scotland A Carrazzo R Houlihan M Murphy B Fisher E Betts.
Essendon: J Winderlich M Lloyd S Lucas M McVeigh J Hird D Peverill A Monfries.
Injuries
Carlton: C Cloke (concussion).Essendon: N Lovett-Murray (groin soreness) replaced in the selected side by R Dyson.
Reports: Nil.
Umpires: K Nicholls D Sully M Vozzo.
Official crowd: 64,710 at the MCG.
