Lee clocked a combined 74.70 seconds for her two 500 metre races with her second heat of 37.28 seconds also an Olympic record.
Her battling display relegated Olga Fatkulina into silver medal position, the Russian threatening to upset the form book and hand the Korean a rare loss in the discipline she has bossed since winning gold in Vancouver four years ago.
"I like it. But I didn't know that I could do that. I wasn't sure that I could get a gold medal because my left knee was hurting and other competitors had pretty good results," Lee told reporters.
"Frankly, I'm not in as good condition as I was when I broke the world record (in November). So when I was skating I had a bad feeling but everyone said I was doing good so I trusted them."
World record holder and Lego fan Lee was the overwhelming favourite heading into the Sochi Games having dominated the discipline over the current World Cup season, but injury concerns and the faltering form of her compatriots in Sochi had her worried.
Mo Tae-bum and Lee Seung-hoon failed in the men's sprint and 5,000m in Sochi as the weight of expectation from being the best speed skating nation in Vancouver appeared to take its toll.
However, Mo confidently predicted that Lee would end the drought and the 24-year-old Seoul skater duly delivered.
She topped the time sheets by 0.15 seconds after her first run from the outside lane in the final heat to eclipse the previous mark of 37.57 set by Fatkulina in the 16th of 18 pairings.
Russian fans sniffed an upset, though, and attempted to inspire their athletes to rein in Lee's mark in the second run.
"I felt like it was a war and the whole army was standing behind me," Russian Angelina Golikova said of the support she received on her way to finishing 18th overall.
It was even noisier for Fatkulina.
The 24-year-old, who took up the sport after a coach told her it might be a good way to use up her excess energy, flew around the oval in 37.49 seconds to top the leaderboard with a highly competitive time of 75.06 seconds.
Lee ruined the party, though, in the final heat as she finished 0.36 seconds inside the Russian's total time to deflate the Adler Arena.
"I had a small hope that I could win gold," an emotional Fatkulina told reporters through tears.
"I must admit the silver medal must be shared with the highly supportive crowd because they were the source of inspiration. If it wasn't for the support I wouldn't be able to do this. I will share this 50 percent with them."
Margot Boer kept the strong Sochi speed skating run of the Dutch going by grabbing bronze, the Netherlands' eighth medal in four days of competition.
China's Hong Zhang finished fourth with Japanese disappointment on the ice continuing as Nao Kodaira could only manage fifth.
- Sports & Recreation
- Olga Fatkulina