Fellow Kenyan Dennis Kimetto had held the previous record since 2014, 2:02.57, also set in the Berlin marathon.
But Kipchoge produced a stunning performance to take it by a clear 78 seconds.
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The gold medal winner from the 2016 Rio Olympics cemented his status as one of the all-time greats with his remarkable run.
"I lack words to describe this day," said Kipchoge. "I am really grateful, happy to smash the world record.
"It was hard. I ran my own race, I trusted my trainers, my programme and my coach. That's what pushed me in the last kilometres."
Eliud Kipchoge of Kenia crosses the finishing line to win the Berlin Marathon 2018
Image credit: Getty Images
Kipchoge ran his first 5km in 14:24, a whole 1:26 ahead of world record pace, and reached 10km in 29:01.
Kipchoge completed half distance in 61:06, leaving him well on course for the record - even though he raced the final 17km without a pacemaker.
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