Dunham's third fight was against The Ultimate Fighter 8 winner, Efrain Escudero on January 11, 2010 at UFC Fight Night 20 where the fight was the co-main event. Dunham rallied from a rough first round, taking the second and finally finishing with an armbar in the third round, nearly breaking Escudero's arm. The submission earned him an extra $30,000 for winning Submission of the Night honors.
Dunham faced Xtreme Couture standout and ex-training partner Tyson Griffin, on June 12, 2010 at UFC 115. Dunham was dominant in all three rounds, taking Griffin's back on numerous occasions and effectively countering strikes. He won the fight via split decision (30-27, 28-29, 29-28).
Dunham faced former UFC Lightweight Champion Sean Sherk on September 25, 2010 at UFC 119. He received the first loss of his MMA career via controversial split decision. Sherk utilized his wrestling during round 1, opening up a large cut above Dunham's right eye and boxing well in the early part of round 2, while Dunham utilized submissions and effective striking throughout the latter parts of rounds 2 and 3. UFC president Dana White later said that he felt Dunham was 'robbed'. The bout was awarded Fight of the Night honors.