Russian Plushenko had been swaggering around all week with the air of a man who had already won gold, but Lysacek wowed the judges with an artistic performance to Sheherazade that brought the roaring crowd to their feet.
Unlike Plushenko, he did not attempt any quadruple jumps in his routine but was handsomely rewarded for his wobble-free jumps and his exquisite choreography.
His score of 257.67 eclipsed Plushenko by 1.31 points. Daisuke Takahashi won Japan's first medal in the event when he finished third despite falling over on his quad.
"I had so much fun tonight. I love this crowd, I love this ice, it was definitely my best. Mission accomplished. I was feeling more relaxed after the first jump," Lysacek said as he jumped up and down backstage when Plushenko's score of 256.36 flashed up.
"I couldn't have asked for much more than that. To get a personal best in the most important moment of my life, you dream about it."
Brian Boitano was the last American man to win the title when the Games were also held in Canada, in Calgary in 1988.
Lysacek wiped away 22 years of hurt with the performance of his life.
The American, the first of the main medal contenders to skate, took to the ice after being given a pep talk by his coach Frank Carroll and with two black and white crystal-encrusted snakes - representing good and evil - around his neck sparkling under the floodlights.
As soon as he landed his opening triple Lutz-triple toeloop combination, he closed his eyes in relief and then flew through his routine which featured 12 jumps, including seven in combination.
As he started his final spin, he had already started to punch the air even before the final notes of his music had finished. He closed his eyes and punched the air five times with clenched fists as he shouted "yes, yes, yes, yes, yes".
However, he still had to wait for Plushenko.
The 27-year-old showman, sporting a sequinned bodysuit with red waistcoat and silver tie pattern, flirted with the camera, winked at the crowd, blew a kiss towards the judges but all that could not hide the faults in his routine.
The Russian drew gasps as he wobbled on the landing of his triple Axel. He performed 11 jumps, but also had another snatched landing midway through his display.
Plushenko clearly thought he had won, ending his final spin by blowing a kiss into the camera before holding aloft his two gloved index fingers high into the air.
Despite being dethroned, the cocky Russian would not give up the spotlight. As his name was called for the silver medal, he leapfrogged over the gold medallist's podium to take his place on the lower platform.
"I was sure I'd won," said Plushenko afterwards.
"I think we need to change the judging system -- a quad is a quad. If an Olympic champion doesn't do a quad, well I don't know.
"Now it's not men's figure skating, it's dancing. The (figure skating) movement needs to go forward, not stand still and definitely not go back."
He also suggested the fact a north American had won was partly down to the fact the Games were in that continent.
"You don't have business right now in the US, your (skating) shows have closed. In Russia we have a lot of shows. So now you have an Olympic champion you will have sponsors and figure skating will go up a bit," he said.
Nobunari Oda's hopes of winning a medal came undone when he suffered a wardrobe malfunction midway through his free skate.
Following a crash landing on the triple loop, memories of Tonya Harding's skating debacle at the 1994 Olympics came flooding back when Japan's Oda had to stop mid routine to sort out one of his bootlaces.
With the long laces trailing his boots on the ice, Oda skated up to the judges seeking permission to retie the offending piece of cord.
A voice over the loudspeaker announced to the bemused crowd: "The skater has three minutes to address the problem."
He went up to his coach and frantically tried to sort out his laces before stepping back on ice to complete the last third of his Charlie Chaplin program.
By then the damage was done and he finished seventh in the event.
"It came untied, it's my fault, I feel guilty for myself for doing this. I will try to make sure it does not happen again," a dejected Oda, who had been lying fourth after the short program, said.
An utterly dejected Brian Joubert admitted he needed to change his attitude from 'being a boy to a man' after his Olympic hopes were again shattered by two disappointing programmes.
The outspoken Frenchman, who had also messed up in Turin four years ago, suffered a total meltdown in Vancouver.
"I had a bad attitude. I was not listening to anybody. I wanted to do it my way," Joubert said after earning a combined total of 200.22 which left him as one of the also-rans.
"I want to... look to the future and change my attitude from being a boy to a man."
Place of birth: Chicago, United States
Residence: Los Angeles, United States
Previous Olympic results:
Fourth, 2006 Winter Olympics
Gold medallist, 2009 world championships
2x bronze medallist, 2006, 2005 world championships
2x gold medallist, 2007, 2005 Four Continents championships, men
Runner-up, Grand Prix 2009-10 ranking
Lysacek started the sport in 1994 and made his debut for the United States in 2003. He originally wanted to play ice hockey but chose figure skating after enjoying early success in the sport.
He missed the 2008 world championships due to a shoulder injury and suffered a stress fracture in his hip in 2004.
The 24-year-old takes method acting classes in Beverly Hills in the United States and has appeared in an independent skating film.