We present an ab-initio calculation of the giant dipole resonance in 16O based on a nucleon-nucleon (NN) interaction from chiral effective field theory that reproduces NN scattering data with high accuracy. By merging the Lorentz integral transform and the coupled-cluster methods, we extend the previous theoretical limits for break-up observables in light nuclei with mass numbers (A<=7), and address the collective giant dipole resonance of 16O. We successfully benchmark the new approach against virtually exact results from the hyper-spherical harmonics method in 4He. Our results for 16O reproduce the position and the total strength (bremsstrahlung sum rule) of the dipole response very well. When compared to the cross section from photo-absorption experiments the theoretical curve exhibits a smeared form of the peak. The tail region between 40 and 100 MeV is reproduced within uncertainties.