McLaughlin, 21, powered down the home straight to finish in 51.46 seconds as she shaved almost half a second off the old mark to reel in compatriot and rival Dalilah Muhammad.
Defending Olympic champion Muhammad, 31, claimed silver with 51.58secs.
The Netherlands’ Femke Bol took bronze behind the reigning world champion.
In a race featuring five personal bests, McLaughlin’s blistering time lowered the mark she set at the US trials in June, when she clocked 51.90secs.
After a near 16-year period of the record remaining in tact, Muhammad and McLaughlin have now exchanged the world best on four occasions in the last two years.
McLaughlin superbly judged her effort in chasing down Rio 2016 champion Muhammad, who set the early pace and still held a slim advantage over the final hurdle.
The new women’s best follows Norway’s Karsten Warholm obliterating his own world record in the men’s 400m hurdles on Tuesday.
Meanwhile, Katarina Johnson-Thompson opened her Olympic heptathlon campaign with a strong performance in the 100m hurdles.
The Briton won her heat in 13.27secs, having only run faster when she won the world title in Doha in 2019.
However, there were signs she was still feeling the effects of the ruptured Achilles she suffered in December while competing in the high jump.
Johnson-Thompson struggled to get close to the 1.98m mark she posted at the Rio Games, clearing 1.86m as she lost ground to Belgium’s Nafissatou Thiam, who won gold five years ago.
The Briton is back in action later on Wednesday as the event moves on to the shot put and 200m.
Earlier on Wednesday Britain’s Andrew Pozzi qualified for the final of the men’s 110m hurdles as a fastest loser after being edged into fourth in a competitive first semi-final.
However, his GB team-mate David King did not progress after finishing seventh in the third semi-final dominated by American world champion Grant Holloway.
Holloway was easing down as he set the fastest time of the round in 13.13secs, with his compatriot Devon Allen – who won the second semi-final – narrowly behind him on 13.18.