The Juddmonte-owned colt followed in the footsteps of his sire, Frankel, when cruising up the inside rail. He was pursued all the way by the runner up, Paul and Oliver Cole's Royal Scotsman.
But it was Balding's youngster who prevailed at the line by a head to take the Group 1 with Nostrum back in third.
It capped a topsy-turvy day for Dettori who had a nasty fall in the opening race but thankfully walked away unscathed.
Balding was emulating his father, Ian, who won the race on multiple occasions but most famously with the brilliant Mill Reef in 1970.
Balding said: "Frankie has given him a fantastic ride and all credit to him. Frankie is the reason we came here because after Doncaster he was adamant this was the race for him. He's played his part massively.
"The horse has won a nice collection of races and the nice thing is he's so relaxed, he should go on next year and certainly stay a mile, so we have a lot to look forward to.
"The Dewhurst is an amazing race to win - it's the most important two-year-old race of the year. My father won it with Mill Reef (1970) and Silly Season (1964) and Dashing Blade (1989), so I've got a bit of catching up to do!
"This is our first season training for Juddmonte and I think this horse was the first one in. It's a huge privilege when you get sent horses like him by the stallions they have access to - it's a dream.
"This horse has been very smart from early on. We thought he was really good in the spring and early summer. He got beaten first time out, but since then he's gone on and on and actually he's got less smart at home as he's got smarter on the racecourse, which is just how you want it really.
"He keeps finding and he's an absolute star. I'm thrilled."
Whether Chaldean will run before next year's 2000 Guineas, for which he was cut to 8/1 from 12/1 by Paddy Power, remains to be seen.
"We'll see how we go in the spring, but I think anything is possible," Balding added.
"I think I'd be comfortable going straight to the Guineas, but we can make that decision nearer the time.
"He's all speed on his dam's side, so I'd be surprised if he got further than a mile."
Dettori told ITV Racing: "He fluffed the start, but luckily I was able to get him up there, and then I shot clear and I thought 'I've got it in the bag'.
"I think he lost his concentration a bit - he was all on his own - and Jim (Crowley, on Royal Scotsman) came late and fast and caught him (Chaldean) by surprise, but luckily the line was there.
"I was nothing but impressed when I rode him at Doncaster. The first thing I said to Andrew was 'Dewhurst', and he obliged.
"He's a proper Guineas horse - we can dream now for next year."