In what was an entertaining clash at Montgomery Waters Meadow, Town raced into the lead when Sean Goss scored after just four minutes.
Within the blink of an eye, Salop were 2-0 up after Ollie Norburn scored from the penalty spot after Harry Chapman had been fouled.
And on the 20 minutes, they had extended their lead even further with Curtis Main this time netting a penalty after Harry Darling handled a Shaun Whalley cross.
MK had been guilty of over-playing far too often with Shrewsbury’s energy and aggression ensuring they kept winning the ball high up the pitch.
But the visitors pulled a goal back when Will Grigg tapped in just two yards out following good work from Ethan Laird.
Shortly after the interval, Shrewsbury grabbed their fourth when Goss fired in his second of the night.
The Dons then netted another consolation through substitute Charlie Brown.
But this was Shrewsbury’s night with the hosts thoroughly deserving of their win.
Town - with assistant manager Aaron Wilbraham again on the touchline and boss Steve Cotterill at home recovering from Covid-19 - opted to name the same team for the third consecutive game with the assistant boss sticking with the side that beat Swindon and Sunderland before drawing at Accrington.
It meant Town continued in a 4-3-3 system that saw Main operate as the central striker with Shaun Whalley and Harry Chapman on the wings.
In midfield, Goss operated slightly ahead of Norburn and Josh Vela.
MK Dons, under the guidance of Russell Martin, lined up in a 3-5-2 formation.
Former Salop and Walsall defender Zak Jules started at left wing-back with Ethan Laird on the right.
Up front, Grigg - who was a transfer target for Shrewsbury in January - was partnered by Cameron Jerome.
Both teams entered the match in impressive form but a blistering start from Town saw them score twice inside the opening eight minutes.
They broke the deadlock after Donald Love charged down the right before delivering a low cross.
And it was Goss who collected it with the midfielder’s clever movement seeing him escape the attentions of his marker before taking a touch and firing in.
That goal came after four minutes.
And three minutes later Salop had a second with referee Leigh Doughty pointing to the penalty spot after Ben Gladwin tripped Chapman.
Norburn then made no mistake from 12-yards with the midfielder firing low and hard down the middle for his third goal of the season.
MK Dons were being far too elaborate on the ball with Martin demanding a tika-taka style that saw every goal kick go short.
And that meant it was far too easy for an energetic Shrewsbury to set traps and win the ball high up the pitch with their pressing.
And after 20 minutes the hosts were 3-0 up with Doughty again pointing to the spot after a cross from Whalley hit the arm of Harry Darling.
Despite Norburn having already scored from 12-yards, Main took the second spot-kick and emphatically found the bottom corner for his first Town goal.
To MK Dons’ credit - they didn’t let their heads drop and pulled a goal back just two minutes later.
A cracking run from Laird saw the wing-back dart into the box before delivering a low cross.
And just two-yards out Grigg couldn’t miss with the striker side-footing home a simple tap-in.
Town were now playing with winger Josh Daniels at right-back after Love was forced to come off injured.
But whether it was Grigg’s goal or they had simply settled, the visitors suddenly began to look a lot more dangerous with Martin’s side finally finding their passing game.
Jerome sent a strike from 20-yards straight into the arms of Matija Sarkic just past the half-hour mark.
And while the visitors continued to see more of the ball from that point, they struggled to create clear cut chances.
That meant Shrewsbury thoroughly deserved their lead as the half-time whistle approached.
And the hosts almost grabbed a fourth in added-on time when Goss won the ball in the middle of the park.
He then fed Chapman who darted into the box. But the Blackburn loanee sent a low drive straight at Andrew Fisher when he should have done better.
MK Dons kept to their passing principles following the re-start with Martin’s men continuing to prod and probe.
But just before the hour mark Shrewsbury got themselves a fourth with the visitors once again guilty of over-playing.
Goalkeeper Fisher looked to play the ball out from the back but yet again Town’s press ensured they won the ball right on the edge of the box.
And that allowed Vela to square for Goss who fired in from around eight-yards for his second goal of the night.
MK Dons responded by making a triple change with Daniel Harvie, Jordan Houghton and Joe Mason replacing Jules, Gladwin and Grigg.
Then just a few minutes later Charlie Brown and Lasse Sorensen replaced Jerome and Laird.
Town made their second change with a little over 20 minutes remaining, Charlie Pyke replacing Main for some fresh legs in the central striker role.
The substitutions Martin made did improve the Dons with Brown firing narrowly wide after twisting and turning in the box.
With around 10 minutes to go, MK Dons pulled another back,
A free-kick out on the left was sent in and following a scramble, Brown fired in from close range.
Town responded by making a triple change with Whalley, Goss and Chapman replaced by Daniel Udoh, Dave Edwards and Scott Golbourne.
From that point they saw out the game fairly comfortably - and could even have had a third with Udoh firing over from 12-yards late on.
Shrewsbury (4-3-3): Sarkic, Love (Daniels 18), Ebanks-Landell, Williams, Ogbeta, Norburn, Goss (Edwards 83), Vela, Whalley (Udoh 83), Main (Pyke 68), Chapman (Golbourne 83).
Subs not used: Burgoyne, Davies.
MK Dons: (3-5-2) Fisher, Darling, Lewington, O'Hora, Jules (Harvie 58), Laird (Sorensen 64), O'Riley, Surman, Gladwin (Houghton 58) Grigg (Mason 58), Jerome (Brown 64).
Subs not used: Nicholls, Johnson.