  For almost two decades the properties of "dwarf" galaxies have challenged the
Cold Dark Matter (CDM) paradigm of galaxy formation. Most observed dwarf
galaxies consists of a rotating stellar disc embedded in a massive DM halo with
a near constant-density core. Yet, models based on the CDM scenario invariably
form galaxies with dense spheroidal stellar "bulges" and steep central DM
profiles, as low angular momentum baryons and DM sink to the center of galaxies
through accretion and repeated mergers. Processes that decrease the central
density of CDM halos have been identified, but have not yet reconciled theory
with observations of present day dwarfs. This failure is potentially
catastrophic for the CDM model, possibly requiring a different DM particle
candidate. This Letter presents new hydrodynamical simulations in a Lambda$CDM
framework where analogues of dwarf galaxies, bulgeless and with a shallow
central DM profile, are formed. This is achieved by resolving the inhomogeneous
interstellar medium, resulting in strong outflows from supernovae explosions
which remove low angular momentum gas. This inhibits the formation of bulges
and decreases the dark-matter density to less than half within the central
kiloparsec. Realistic dwarf galaxies are thus shown to be a natural outcome of
galaxy formation in the CDM scenario.
