Second-place finisher Elizabet Tursynbaeva of Kazakhstan also made history by being the first woman to successfully land a quad jump in senior international competition and the first woman from her nation to claim a world championship medal.
Zagitova, who finished fifth at last year's edition after a disastrous free skate and then endured a difficult season, struggled to hang onto a few of her jumps in an otherwise dynamic routine that included seven triple jumps.
In first place after the short programme, Zagitova wept in the arms of her coaches after coming off the ice from her free skate but was smiling by the time her score was posted, 155.42 for a total of 237.50.
"There were many hard times, but I'd like to thank the audience and everyone else who supported me," she said at the Saitama Super Arena.
"Japan always welcomes me warmly," the 16-year-old - who has a Japanese Akita dog as a pet - added. "Because of everyone's support, I was able to achieve this."
Zagitova's sensational routine in Saitama
Tursynbaeva claimed silver with a flowing skate that kicked off when she successfully landed a historic quadruple Salchow.
The diminutive Kazakh, 19-years-old and 148cm tall, pumped her fist in the air on completing her routine with a score of 148.80 and a total of 224.76.
"I still cannot believe I won the silver. To tell the truth, during the practice session I was feeling weird," she said.
"I am glad that after all I managed to focus on my performance and am pleased that I landed the quadruple Salchow."
Olympic silver medallist Evgenia Medvedeva of Russia took bronze, surmounting a rough transition season after moving to Canada to train with coach Brian Orser, who also coaches top skaters such as double Olympic champion Yuzuru Hanyu.
Evgenia Medvedeva, right, had to settle for a bronze medal
Image credit: Getty Images
The women's competition threatened to be overshadowed by an incident in practice on Wednesday when American skater Mariah Bell made contact with South Korean rival Lim Eun-soo, leaving her with a cut leg.
But the International Skating Union (ISU) ruled that the accident was unintentional and Korean skating officials said the two might meet later on Friday so Bell could apologise.
In ice dance, reigning world champions Gabriella Papadakis and Guillaume Cizeron of France took a decisive step towards a fourth ice dancing crown after clinching a strong lead with an elegant tango-themed rhythm dance.
Gabriella Papadakis and Guillaume Cizeron perform during the ice dance rhythm dance event
Image credit: Getty Images
Skating last before a packed house, the Olympic silver medallists - who narrowly missed gold at Pyeongchang after a mishap with Papadakis's costume in the short programme - were awarded 88.42 points for their sultry routine.
"We're very pleased with this performance, because we skated really well. We love this programme, we love the choreography, we love working on it," Papadakis said.
The worlds conclude on March 23 with the ice dancing final and the keenly-watched men's final, with American Nathan Chen in the lead after the short programme.