The 3-year-old gelding and jockey Calvin Borel found room along the rail deep in the stretch then pulled away for a 63/4-length win to give the 50-1 long shot one of the biggest upsets in the 135-year history of the race.
It was the largest margin of victory in the Derby since Assault won by eight lengths in 1946. Barbaro won in 2006 by 61/2 lengths.
The Derby win was the second in three years for Borel, who used a similar stretch run to send Street Sense to the winner's circle in 2007.
Mine That Bird joins Giacomo, who won in 2005, as one of the most unlikely victors in the Run for the Roses. Mine That Bird covered the 11/4 miles in 2:02.66 and paid $103.20 to win. The payout was the second largest in Derby history behind Donerail ($184.90) in 1913.
Pioneer of the Nile held off Musket Man for second, but neither was a match for the unheralded horse from New Mexico.
Friesan Fire, who became the favorite after I Want Revenge was scratched earlier in the day, finished a distant 18th in the 19-horse field.
Borel thrust his right arm in triumph as he crossed the wire, and trainer Chip Woolley hobbled to hoist the trophy. The trainer from New Mexico broke his right leg in a motorcycle accident over the winter and drove his stable's star 21 hours to Churchill Downs.
"They'll know who I am now," Woolley said from underneath his massive black cowboy hat.