In a run no less sensational than his world record performance in the 100m final last Saturday, the 21-year-old destroyed the field to clinch his first major title in his specialist event.
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Churandy Martina of Netherlands Antilles took silver in 19.82 second and bronze went to defending champion Shawn Crawford of the US in 19.96 seconds after his compatriot Wallace Spearmon was disqualified for running out of his lane.
American Carl Lewis was the last man to win both sprints at the same Games in Los Angeles and Bolt became just the ninth athlete to achieve the feat.
The previous world record was 19.32 set by Michael Johnson of the US in the 1996 Atlanta Olympics final.
Bolt started well again to hit the front before he came off the bend and he powered down the straight to win by at least five metres.
The 6ft 5in (1.96m) former world junior champion owned the best time of this year (19.67) and finished second behind American Tyson Gay at the 2007 world championships in Osaka.
When an injury at the US trials deprived Gay of the chance to run the 200m in Beijing, Bolt immediately became a strong favourite for the event.
DOUBLING UP
Bolt's coach Glen Mills had always wanted him to emulate Johnson by doubling up in the 200 and 400 but he had never enjoyed the tougher training for the one-lap event.
The pair reached an agreement last year that if he broke the Jamaican 200m record of 1976 Olympic champion Don Quarrie, he would be allowed to try the 100 and the reggae-loving Bolt duly delivered.
The impressive 10.03 seconds he ran in his first outing in the 100 in 2007 was just a prelude to his remarkable assault on the event in 2008 and he has now set new world marks.
A keen cricketer before he turned to athletics, Bolt first announced his talent when he became the youngest world junior champion by winning the 200m in Kingston in 2002 at the age of 15.