Phelps became the third Olympian to win the same individual event at four straight Games, joining discus thrower Al Oerter and Carl Lewis in the long jump in achieving the feat.
Lurking in second until the end of the breaststroke third leg, he surged home on the closing freestyle lap to win in 1:54.66.
That was almost two seconds in front of silver medallist Kosuke Hagino of Japan, the 400m individual medley champion who powered from fifth at the final wall to touch in 1:56.61.
China's Wang Shun was third in 1:57.05.
Phelps' old foe Ryan Lochte led at the halfway point, but the world record-holder in the event couldn't hang on and finished fifth.
Brazilian contender Thiago Pereira, buoyed by an ecstatic crowd, led after the opening butterfly lap and was equal second at the halfway point, but faded to finish seventh.
Phelps claimed his 22nd Olympic gold medal and his fourth at the Rio Olympics.
The most decorated Olympian of all time was back in the pool later on Thursday in the 100m butterfly semi-finals.