Radcliffe set the mixed record, where a female runner uses male pace-makers, back in 2003 when she ran 2:15.25 in London.
The Brit was also the holder of the "women-only" record until Mary Jepkosgei Keitany went faster than that mark two years ago.
But Kosgei destroyed both of those times in Chicago as she produced a sensational run, coming home in a time of 2:14.04.
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And Radcliffe was at the finish line to congratulate the 25-year-old, who successfully defended her title from last year and also won the London Marathon in the spring.
Radcliffe said: "We always knew this time was going to come and when I saw how fast Brigid was running in the first part of the race, I knew if she was able to hold that together she was always going to beat the time.
"For me, 17 is my lucky number and it was 17 years ago today that I set the first world record right here in Chicago. It was a very special day for me and today was a very special day for Brigid."
The Kenyan's record comes just a day after Eliud Kipchoge became the first man ever to run under two hours for the marathon in a special event in Vienna.
Kosgei too ran with pace-makers but far fewer and admitted she even surprised herself with the run.
"I'm happy but I was not expecting to run like this today," Kosgei said.
"There was a little bit of wind but the course was okay. Last year I came and I knew it was a good course."
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