The 26-year-old American clocked 47.78 seconds on a rain-slicked Tokyo track to smash the previous championship record of 47.99 seconds set by Jarmila Kratochvilova of then-Czechoslovakia in 1983.
Defending champion and Olympic gold medallist Marileidy Paulino took silver in a Dominican Republic record of 47.98 seconds- the third fastest of all time. Bahrain's Salwa Eid Naser claimed bronze in 48.19 seconds.
"It was really about trying to stay as relaxed as possible," said McLaughlin-Levrone, who credited her coach Bobby Kersee with her transition from the 400m hurdles, in which she won two Olympic golds and holds the world record.
"At the end of the day, this wasn't my title to hold on to; it was mine to gain," she said.
"Bobby uses boxing terms all the time. He said, 'You've got to go out there and take the belt, it's not yours, and you've got to go earn it.'
"So it really just was about running the best race I could, and I'm grateful that we were able to do that."
Having smashed the US record in the semi-final, McLaughlin-Levrone looked set to unleash something big in the final, perhaps even threatening Marita Koch's 40-year-old world record of 47.60 seconds.
So it proved.
McLaughlin-Levrone was drawn in lane five, outside Cuba's Roxana Gomez and inside Britain's world indoor champion Amber Anning.
Temperatures at the National Stadium had dipped from recent sultry conditions, and steady rain fell.
But the wet track made no difference as McLaughlin-Levrone motored out of her blocks.
By the halfway mark, she had already gone past Anning, and she ran a fine curve to put herself ahead in the home straight.
Paulino briefly looked like she might threaten from the outside lane, but McLaughlin-Levrone, with her eyes glued on the clock, used every sinew in her body to propel herself over the line.
She crossed it in a championship record, but fell agonisingly short of the record set by Koch of then-East Germany in Canberra in 1985, one of the oldest in the books.
The golden girl of US track and field was left gasping for oxygen and seemingly shell-shocked.
She enjoyed a brief moment's respite sitting on a chair, with a bottle of water, tucked away from the public eye.
But then she returned to the track, to rapturous applause, to soak up the plaudits, don an American flag and search out her husband Andre in the stands for a kiss.
McLaughlin-Levrone's presence in the 400m, as opposed to the 400m hurdles, has certainly revived an event that has lacked spark in recent years.
And her victory will go a long way to silencing those detractors who questioned her decision to step away from the 400m hurdles, an event in which she went unbeaten for six seasons, to focus on the flat race.
"I know there was a lot of doubt from a lot of people for me making this switch, and I just wanted to show myself I can do it," she said.
"I see things online. I see what people say, and ultimately, that's okay. I think that's what makes the sport great. I think they want to see great matchups.
"They want to see people be uncomfortable, and I think today was a really great race for track and field."
McLaughlin-Levrone was one of the stars when Tokyo hosted the COVID-delayed Olympic Games in 2021.
She set a world record of 51.46 seconds when winning 400m hurdles gold in one of the standout performances of those Games.
She backed that up with a second gold at last year's Paris Olympics, again thrilling in the hurdles with another world record of 50.37 seconds, her sixth.