It hiked its key interest rate by 750 basis points to 25%.
That was larger-than-expected and caused a rare lira rally which sent it to its strongest level since mid-July.
It was a signal of the central bank's new aim to address inflation as part of a broader policy u-turn.
The policy committee includes three members taking part for the first time.
It said it would tighten "as much as needed in a timely and gradual manner" to cool inflation - which hit almost 48% last month.
The move leaves the policy rate at its highest level since 2019.
Analysts said the move was the clearest step yet toward more orthodox policies.
It comes after years of unorthodoxy under President Tayyip Erdogan.
And market watchers believe it should help rein in inflation expectations.
The lira had touched new all-time lows almost daily in recent weeks.
But it jumped more than 3% versus the dollar after Thursday's decision.
Turkish bank stocks rallied nearly 10%.
Economists had only expected a median hike of 250 basis points - from a previous 17.5%.
Some analysts had even predicted a more dovish move given the bank undershot expectations in the last two months.
