Ed Clancy, Geraint Thomas, Peter Kennaugh and Steven Burke clocked three minutes 51.659 seconds to triumph by a supreme margin ahead of arch-rivals Australia.
Australia’s Jack Bobridge, Glenn O’Shea, Rohan Dennis and Michael Hepburn finished with silver in 3mins 54.581secs.
The British quartet, who won Track Cycling World Championships gold in Melbourne in April, now have successfully defended the title won by Clancy, Thomas, Bradley Wiggins and Paul Manning in Beijing.
New Zealand’s Sam Bewley, Marc Ryan, Jesse Sergent and Aaron Gate claimed bronze in 3:55.952.
It was the second time the British quartet had improved the world record they set in Melbourne in April, and they now have the four fastest times in history.
Thomas told the BBC: “The amount of work we have had to put in has been unbelievable. “In November at Manchester we were up at 7.30 in the morning. They have been on our backs since then.
“The crowd is just unbelievable. My ears are ringing, it’s just too loud.”
The night got even better for Team GB when Victoria Pendleton claimed Great Britain’s third gold medal in two days of competition at the velodrome with a stunning triumph in the keirin.
In the event which begins behind a motorised Derny bike, the 31-year-old from Stotfold, who is set to retire after London 2012, stormed to victory. Guo Shuang of China was second, with Lee Wai Sze of Hong Kong third.
Pendleton said it was hard not to be distracted by the excitement British riders’ success was causing in the velodrome.
“I can barely believe it right now,” Pendleton told BBC1.
“It was really hard with the excitement of the great job the girls did qualifying with a world record and then the guys smash the world record and win a gold medal – I was just, like, ’Focus, Vic, focus. You’ve still got a race’.
“But it was so hard. I can’t believe it.
“Thank you so much to everyone who’s helped me get here.”