Hoey finished in one minute 42.5 seconds to beat the previous record of 1:42.67 set nearly 29 years ago in March 1997 by Denmark's Wilson Kipketer in Paris.
Hoey, who won gold in the same event at the World Indoor Championships in 2025, already clocked an impressive time (1:43.24), then he set second-fastest time in history, in New York last year.
Hoey said he just tried to stay calm and allowed his pace-setting brother Jaxson to pave the way for the win.
"The last 200 I could feel just the support of everyone, and the work of the last couple of months just bottomed out, and I'm happy I got that time," he said.
It was a huge triumph for Hoey, who went through the agony of missing out on making the US teams for both the 2024 summer Olympics and last year's outdoor World Championships in Tokyo.
Poland's Filip Ostrowski finished second with a personal best time of 1:44.68 while Dutchman Ryan Clarke secured third with a new national record of 1:44.72.