Kampmann scored well with early takedowns but the taller Condit began to connect with his strikes. Kampmann, his face a bloody mask, was barely surviving when the third round ended.
Condit (29-7) hurt Kampmann with a barrage of blows in the fourth, hurting Kampmann with a body shot and finishing him at the fence with a flurry before referee Herb Dean stepped in 54 seconds in to protect a crumpled Kampmann (20-7).
"He's one of the best in the world," UFC president Dana White said of Condit. "He looked awesome in that Johny Hendricks fight (Condit lost by decision), he looked awesome in this fight here tonight. I love his attitude. He's a finisher."
Condit and Kampmann each picked up a US$50,000 bonus for fight of the night.
In the co-main event before 5,950 at Bankers Life Fieldhouse, home to the Indiana Pacers and Fever, 10th-ranked lightweight Rafael dos Anjos won a unanimous 29-28 decision over No. 6 Donald (Cowboy) Cerrone for his fifth straight victory.
Kampmann, ranked sixth among welterweight contenders, walked out first to "It's a Fight" by Three 6 Mafia. No. 2 Condit followed to Rage Against the Machine's "Know Your Enemy."
Kampmann immediately took Condit down, exploiting a rare chink in Condit's armour. Going into the fight, Condit had defended just 27.3 per cent of his takedowns, well below the UFC average of 59 per cent.
When they got back up, the Las Vegas-based Dane stuck to Condit like glue. After absorbing some strikes, Kampmann seemed to favour his eye but managed to record four takedowns in the round.
Condit resisted takedowns in the second and began to find his striking range, bloodying Kampmann's nose and connecting with a kick to the head. The Dane looked frustrated as he headed to his corner.
Kampmann got another takedown early in the third but Condit fought his way up at the fence. Then he opened a cut on the forehead between Kampmann's eyes. Condit took the fight to a bloody Kampmann, pounding him on the feet, then mounting him late in the round and trying two submissions at the fence.
A gutsy Kampmann rebounded with a takedown to open the fourth. But then Condit took over, connecting at will and ending the fight with a string of brutal knees.
According to FightMetric, Kampmann led 6-0 in takedowns but Condit had a huge 110-35 edge in significant strikes."I got the fast start I wanted ... but I gassed myself out completely," said Kampmann. "After the first round, I didn't feel I had anything left. I just went into survival mode."
The main event will have been watched closely by a pair of Canadian 170-pounders, who are preparing for UFC 167 in November.
The next major piece of the welterweight puzzle will fall in Las Vegas where champion Georges St-Pierre of Montreal meets No. 1 contender Hendricks and No. 3 Rory (Ares) MacDonald of Montreal faces No. 9 (Ruthless) Robbie Lawler.
Condit, a former WEC and interim UFC champion, lost his UFC debut by split decision to Kampmann in April 2009. Condit won his next five fights — including a victory over MacDonald — before losing to St-Pierre and Hendricks.
For dos Anjos (20-6), it was his ninth win in his last 11 outings.
Cerrone (20-6 with one no contest) had only spent 16 seconds on his back in his first nine UFC fights. But dos Anjos, after wobbling him with a blow to the head, put him there three minutes into the first round and hurt him with some ground and pound.
Both fighters scored takedowns in the second while Cerrone, taking the fight to dos Anjos, had the better of the third.
Earlier, UFC newcomer Brandon (Rukus) Thatch lived up to the hype, battering welterweight Justin (Fast Eddy) Edwards (9-3) en route to a first-round stoppage that was worth $50,000 for knockout of the night.
Thatch (10-1) used kicks and knees to subdue the smaller Edwards, who eventually toppled at the fence from a punch to the head. Referee Rob Hinds stepped in at one minute 23 seconds to save the outmatched Edwards from further punishment.
"I hit him with a really hard knee to the head and he just kept coming. He was incredibly tough," Thatch said of Edwards, who fell to 2-3 in the UFC.
All of Thatch's wins have come in the first round. And they have taken a combined 12 minutes 33 seconds to complete.
Three of those wins came in Montreal's Instinct MMA promotion — they lasted a total of two minutes 28 seconds — with the last performance prompting St-Pierre to request the 28-year-old from Denver as a training partner.
Kelvin Gastelum impressed in his debut at welterweight after winning Season 17 of "the Ultimate Fighter" as a middleweight. The 21-year-old wasted little time submitting Brian Melancon, knocking him down with an uppercut and then locking in a rear-naked choke.
"WOW!!! Kelvin looked awesome tonight," tweeted White.
Gastelum (8-0) wobbled Melancon (7-3) with a flurry of blows before dropping him with an uppercut. He then took his back and finished him at 2:26.
Court (The Crusher) McGee survived some slick counter-striking from New-Zealand-born Australian Robert Whittaker to win a split (27-30, 30-27, 29-28) decision in a matchup of "Ultimate Fighter" winners.
Whittaker (12-3), who trained at the Tristar Gym in Montreal for this fight and had coach Firas Zahabi in his corner, used his left jab and right elbow to carve open McGee's face. But McGee (16-3) kept coming and won the decision, his second straight victory since dropping to welterweight.
Japanese bantamweight Takeya Mizugaki won a split (28-29, 29-28, 29-28) decision to hand Mexico's Erik (Goyito) Perez his first loss in the UFC after three wins. Mizugaki (18-7-2), showing off a deep bag of tricks in a fast-paced fight, had the better of the third round to record the win.
Perez (13-5) saw his eight-fight win streak snapped in one of the better bouts of the night as both 135-pounders punched well above their weight.
Brad Tavares improved to 6-1 in the UFC as a middleweight, taking a unanimous 29-28 decision over Bubba (The Menace) McDaniel (21-7). Tavares (11-2) controlled the first two rounds, lashing McDaniel's lead leg with kicks, but had to fight from the bottom after being taken down in the third.
"It was a frustrating fight," said Tavares. "I couldn't find his chin."
Australian middleweight Dylan (The Villain) Andrews, after hurting his shoulder and losing the first two rounds, rallied to stop Sweden's Papy (Makambo) Abedi with a flurry of punishing blows. Andrews (18-5 with one no contest) rocked Abedi (9-3) with a right and then an uppercut before finishing him on the ground at 1:32 of the third.
Andrews apologized for his performance, saying he heard his shoulder crack when he was dumped in the first round. He exited the cage with his left arm hanging down motionless inside his T-shirt, saying later he had separated his shoulder.
Indiana's Darren (The Damage) Elkins improved to 6-1 as a featherweight with a unanimous 29-28 decision over veteran Hatsu Hioki of Japan. Elkins (18-3) was hurt by a kick to the liver in the first round but rallied to take the third round, hurting Hioki (26-7-2) with ground and pound.
The card started in bizarre fashion when the lightweight bout between Roger (Relentless) Bowling (11-4) and Abel (Killa) Trujillo (10-5) was stopped at 4:57 of the second round and declared a no contest because of what was deemed an unintentional foul.
The foul in question was a pair of Trujillo knees delivered to a kneeling Bowling at the fence. The knees were followed by a punch which left Bowling dazed on the ground as a doctor looked him over. Most — including Bowling — thought Trujillo, who was deducted a point for the infraction, knew what he was doing when he launched the knees.
Trujillo predictably saw it differently.
"Both of those knees were legal. I saw he was breaking and I hit the second knee at the top of his chest," Trujillo said. "The punch is what really hurt him. He acted his way to a no contest."
"Both those knees were legal!!! Trujillo should have won," he tweeted.
The UFC boss said later he would pay Trujillo his win bonus despite the result.
Welterweight Jason (The Kansas City Bandit) High (18-4) stopped James Head (9-4) via a nasty guillotine choke at 1:41 of the first round for his first UFC win.
In his welterweight debut, Zak Cummings (16-3) defeated Australian Benny (Blanco) Alloway (13-6) via d'Arce choke at 4:19 of the first round. Cummings got $50,000 for submission of the night.