The Ducati rider bounced back from his crash on Saturday at the Aragon circuit, when he slid off on the penultimate lap to hand victory to the Northern Irishman.
Davies made no mistake second time around as he won his duel with the reigning champion, nudging home half a second clear of Rea, with Ducati team-mate Marco Melandri in third.
Rea's second place was still enough to extend his lead in the championship standings to 50 points, with the Kawasaki rider looking set to become the first rider in history to win three straight World Superbike titles.
Rea's Kawasaki team-mate Tom Sykes finished in fourth place after a weekend blighted by sickness, pipping Dutchman Michael van der Mark into fifth place on his Yamaha.
But there was disappointment for Alex Lowes, who had started race two at the front of grid but made a mistake to slide off the track and, despite recovering, had to settle for 13th place.
Read the full article on eurosport.co.uk: Chaz Davies wins thriller to end Jonathan Rea’s perfect start