Halkia raced home in 52.82 seconds to thrash Romania's Ionela Tirlea-Manolache (53.38) and Ukraine's Tetiana Tereshchuk-Antipova (53.44).
World champion Jana Pittman of Australia, running after a brave battle against injury, finished fifth and world record holder Yuliya Pechenkina of Russia trailed in last after a wretched run.
The 25-year-old winner, who came from nowhere to run the sixth fastest time in history during the semi-finals, knelt on the ground to kiss the track after her triumph as the crowd bayed their support.
"She did an awesome job," Pittman said. "It's a beautiful story for her to win in front of her home crowd."
When Halkia, wearing yellow shades and sporting blond-tinted hair, was presented at the packed Olympic stadium the roars of "Hellas! Hellas!" were so loud that the names of her rivals could not be heard.
Last to settle in her blocks after being drawn in lane four, she drew level with Pittman outside her at halfway before leading down the last 100 metres and pulling further away after clearing the final hurdle.
None of the pre-Games favourites had seen Halkia coming.
Kept out of the international spotlight by her coaching team this season, the former high jumper was putting together an incredible series of performances, improving her personal best by almost three-and-a-half seconds in 12 months.
A year ago she was a no-hoper, with a best of 56.40 -- a time which would have left her outside the first eight in any Olympic final stretching back to 1988.
By Thursday, however, following her extraordinary run in the semi-finals when she clocked 52.77, she was the favourite with a personal best good enough to have won at any preceding Olympic Games since the event made its debut in 1984.
That time would also have won any preceding world championships apart from 1995 in Gothenburg.
Pittman tore a knee cartilage and underwent surgery less than three weeks ago before ignoring medical advice and undertaking a nine-hour-a-day rehabilitation programme in an attempt to run in Athens.
She was given a one percent chance of running by the first specialist she consulted but refused to accept his opinion.
