A brace from Will Grigg and further goals from Dean Bowditch, Darren Potter, Dele Alli, Benik Afobe and Carl Baker saw the Dons winners in the final fixture before Christmas.
MK Dons dominated a lot of the first half with Latics struggling to cope with the pace and power of the attack.
Grigg and Potter had chances early for Dons but both shot over as the home side were knocking on the door.
Paddy Kenny was forced into a smart save low down on 13 minutes as Baker found space but the former Leeds and QPR stopper saved well.
A mix up on 16 minutes allowed MK Dons a goalscoring chance as Brian Wilson's pass-back was picked up by Paddy Kenny.
Jordan Spence laid the ball back to Grigg from eight yards to fire through the legs of Kenny to give the Dons the lead.
The home side were in complete control and had opportunities to extend their lead but Grigg and Bowditch could not find the target from the edge of the box.
Latics started to come back into the game as Mike Jones struck over from 25 yards just before the half hour mark.
The best chance of the half came on 36 minutes as Daniel Johnson played an inch-perfect through ball into the path of Jonathan Forte but the forward was denied by goalkeeper, David Martin.
Johnson's strong runs through midfield were causing problems for Dons and Baker picked up a booking for bringing the loanee down just outside the box.
Just as Latics felt they could have a foot in the game, MK Dons raced up the field and bagged their second.
The ball found Spence on the right wing and he crossed for Bowditch who slid the ball past Kenny to extend their lead.
It could have been more going into the half time break but Genserix Kusunga's last ditch tackle denied Grigg from progressing through on goal and the referee blew for half time.
George Elokobi was introduced at the break in place of the injured Joseph Mills who was fouled by Spence just before the break.
Latics started the second half disastrously, conceding two goals in quick succession.
The defence failed to deal with a header into the box and Grigg got behind the defence and guided the ball past Kenny to make it 3-0.
Three soon become four as very neat play on the edge of the box saw Potter fire home from inside the box on the angle.
Latics were really under the cosh but almost found a goal back a minute later however Forte's shot was well held by the Dons goalkeeper.
Michael Tidser and Jabo Ibehre were brought on to prevent the onslaught but Dons almost made it five on 57 minutes however Bowditch's shot was well parried by Kenny.
Just after the hour mark, Mike Jones rattled a shot from 25 yards which just scraped past Martin's post and out for a goal kick.
That was the only real chance for Latics in the second half as Dons continued their onslaught.
Alli made it five on 77 minutes, neatly slotting the ball past Kenny from inside the box and seven minutes later it was six.
Substitute Afobe was allowed aches of space inside the box and headed home from inside the six yard box to compound Latics misery.
That misery was further compounded as Baker slid the ball past the goalkeeper to make it seven.
MK Dons: Martin, Lewington, McFadzean, Kay (Baldock 65'), Potter, Bowditch (Afobe 68'), Grigg, Spence, Baker, Alli, Carruthers (Green 74').
Subs not used: McLoughlin, Flanagan, Powell, Rasulo.
Oldham Athletic: Kenny, B.Wilson, J.Wilson, Kusunga, Mills (Elokobi 46'), Dieng (Tidser 56'), Jones, Johnson, Forte, Philliskirk, Poleon (Ibehre 56').
Subs not used: Rachubka, Dayton, Winchester, Morgan-Smith.
Goals: MK Dons (Grigg 16', 49', Bowditch 43', Potter 51', Alli 77', Afobe 84', Baker 90') 7-0 Oldham Athletic