How to convert the ^M linebreak to ‘normal’ linebreak in a file opened in vim?

:%s/<Ctrl-V><Ctrl-M>/\r/g

Where means type Ctrl+V then Ctrl+M.

Explanation

:%s

substitute, % = all lines

<Ctrl-V><Ctrl-M>

^M characters (the Ctrl-V is a Vim way of writing the Ctrl ^ character)

/\r/

with new line (\r)

g

And do it globally (not just the first occurrence on the line).