The Koreans had been heading for a clean sweep of the medals when favourite Lee Ho-suk crashed into Sung Si-bak while overtaking him on the inside and took him down with him, with Lee Jung-su only just escaping going the same way.
The mistake by the Koreans handed American Apolo Anton Ohno the silver to enable him to become the discipline's most decorated Olympian.
Compatriot J.R. Celski picked up the bronze after a thrilling final few metres which drew gasps of disbelief from the crowd.
"It was a crazy race," said Ohno, who was trailing in fourth several metres behind the leaders before the crash.
"I saw Ho-suk set up a pretty crazy pass on the inside. It did not work out well for him. Oh man, it feels good."
Lee Ho-suk, silver medallist in 2006, and Sung rushed past reporters with no explanation for what had gone wrong - and they were not the only ones who got no answers.
"They didn't talk to me about the accident," champion Lee said. "They smiled and congratulated me and I thanked them profusely.
"We had expected gold, silver and bronze and I didn't realise my team mates had collided into the barrier so when I crossed the line it wasn't the greatest feeling as I'd wished for a South Korean sweep."
Ohno drew level with speed skater Bonnie Blair as his country's most decorated winter Olympian with six medals.
"I know I have six medals now and have no regrets as I'll always have this for the rest of my life," he said.
The skaters played cat and mouse for the first few laps, exchanging cagey looks and swapping places at the front before the Koreans made a break and opened up what looked like a winning gap.
But with the finishing line just a few metres away, Lee Ho-suk lost his balance and a deafening roar broke out when Ohno, who spent much of his childhood training in Vancouver, passed the sprawling Koreans to snatch the silver.
Celski was "just ecstatic to be here" after winning a medal on his return to international competition five months after a horrific injury where he sliced his leg to the bone with the razor-sharp 18-inch blade on the bottom of his boot.
"It's the first time two Americans are on the podium in short track. So for me it was a historic night regardless of if I had won gold, silver or bronze," Ohno said.
Latvian Haralds Silovs was fourth in the B final just hours after having taken part in the thigh-burning 5,000 metres long track event, where he came 20th.
"Other competitors were like 'you're crazy'," a remarkably fresh-looking Silovs said. "I'm used to skating with heavy legs."
Britain's Jack Whelbourne progressed through his heat in fortuitous circumstances, advancing when China's Song Weilong fell just metres before the finish line but his luck ran out in the semis as he finished fifth, with only the top two reaching the final.
However, the youngest member of the British short track had no complaints with his performance.
"I had no expectations, I'm only 18 and this is my first Olympics," he said.
"This is only my fifth major competition racing this distance. This is also my first year on the World Cup circuit and I think I'm starting to compete with the top guys."
Place of birth: Seoul, Korea
No previous Olympic results.
Gold medallist, 2009 World Team Championships, team
Champion, 2009-10 World Cup, 1000m
Champion, 2009-10 World Cup, 1500m
Runner-up, 2008-09 World Cup, 1500m
Third place, 2008-09 World Cup, 1000m
Lee began skating at the age of 12. The 20-year-old’s grew up admiring American short track skater Apolo Anton Ohno, the man who finished second behind him in the 1500m final in Vancouver.
The Koreans had been heading for a clean sweep in the race but Lee’s team mates Lee Ho-suk and Sung Si-bak collided and let Americans Ohno and J.R. Celski snatch silver and bronze.