After building up a big lead in the short program, Chen stunned the crowd as he broke his own free skate and total world records, respectively, with scores of 224.92 and 335.30 points.
Japanese double Olympic gold medallist Yuzuru Hanyu was forced to settle for silver as he finished 43.87 points back on 291.43, while France's Kevin Aymoz completed the podium with 275.63.
On Friday, Sui Wenjing and Han Cong gave China its first Grand Prix Final title in a decade as they won the pairs competition.
Kagiyama enjoys perfect Grand Prix debut
The duo won by 7.42 points with a score of 211.69 to extend their unbeaten streak since taking PyeongChang Olympic Winter Games silver.
Wenjing and Cong headed fellow Chinese pair Peng Cheng and Jin Yang who scored 204.27 to take silver while the Russian duo of Anastasia Mishina and Aleksandr Galliamov took bronze with 203.13.
Elsewhere, Alena Kostornaia set a new world record in the women's short program as Russia dominated.
The 16-year-old registered a score of 85.45 points to take a near six-point lead over compatriots Alina Zagitova in second (79.60) and Anna Shcherbakova in third (78.27).
Kostornaia, aiming to win the senior Grand Prix Final a year after winning the Junior Grand Prix Final, performed a brilliant routine that included a sensational triple Axel.
The number one and number three in the world in Alexandra Trusova and Japanese Rika Kihira both fell during their routines and sit in fifth and sixth place respectively heading into today's free skating.
Meanwhile in the rhythm dance, French duo Gabriella Papadakis and Guillaume were the cream of the crop with 83.83 points.
Americans Madison Hubbell and Zachary Donohue are one point behind with 82.72 going into the free dance while compatriots Madison Chock and Evan Bates sit third with 81.67.
Sakamoto takes the spoils in figure skating’s NHK Trophy
Kagiyama leads the way after day one of NHK Trophy action in Osaka