Benavidez (20-4) submitted Elliott at 4:08 of the first round via mounted guillotine. Referee Mario Yamasaki called the flyweight bout as Elliott, whose hands were trapped under Benavidez's base, tapped madly with his feet.
"That was the first time I was able to pull off the "Joeaconstrictor" -- a submission I've worked on and attempted in modified versions in the past," Benavidez said. "Even Joe Silva said he had never seen that before in the Octagon. Tim is tough and I knew an old-fashioned punch to the face wasn't going to stop that wild man, so I had to be creative.
"He is an awesome opponent and that was a lot of fun out there." Elliott (10-5-1) tried to set a high pace on Benavidez early. He charged the former No. 1 contender with punches and shot immediately into a single leg takedown.
The strategy produced good results at first, as Elliott scored three quick takedowns. He opened a cut over Benavidez's right eye with hammerfists from top position.
Elliott struggled to match Benavidez's skill on the floor, however. Benavidez worked back to his feet twice and then swept Elliott to his back after the third takedown. He eventually moved into side control and then full mount.
Once the right arm slipped under Elliott's chin, the tap was inevitable.
Benavidez rebounds from a first-round knockout loss to 125-pound champion Demetrious Johnson in December. He is 7-2 overall in the UFC, with four finishes.
Elliott falls to 2-3 in the Octagon.