The dopey dog ran over the top of Beachy Head cliffs and fell onto the rocky beach below.
Her owner, Tim Castle, 34, was out walking Sheba and the family's two other dogs with sons Ben, eight, and Alex, five, when Sheba disappeared over the edge near the Belle Tout lighthouse.
Fearing 11-month-old Sheba was dead, Tim contacted police and the town's lifeboat, on a training exercise in the Channel, was sent to recover the body.
But, miraculously, they found Sheba running around on the beach with nothing more than a few scratches and bruises.
Lifeboatmen wrapped her in a blanket and took her back to the lifeboat station.
Tim's wife Tamsin, 30, of Queen's Crescent, Eastbourne, said: "We couldn't believe it when the lifeboat crew rang to say they had found Sheba alive and well.
"I thought we would never see her again.
"We were so excited and relieved. She seemed fine but a little subdued.
"We took her to the St Annes Veterinary Centre in Eastbourne and had her checked for any broken bones but she is all right.
"All she has is a bruised eye and a scratched tummy. I have no idea how she survived the fall. Maybe her big ears slowed her down.
"The tide was in and she may have fallen in water and swam to the beach.
"We all thought Sheba was the sensible one, but that obviously isn't the case. I can only think she saw a bird and decided to chase after it.
"I don't think we will be going near Beachy Head with her again."
Colin Mulvana, operations manager for Dover Coastguard, said: "It is a miraculous escape.
"The lads in the lifeboat thought they were going to recover a body, so they thought it was brilliant to see Sheba alive and well.
"We think she should be renamed Bouncer. She is the luckiest dog in Britain."
Sheba is recovering at home with the Castle family and their two cats, Toffee and December.
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