Dressel, fresh from his sizzling gold in the 100 metres freestyle, posted the third fastest time ever with a punchy 50.08 seconds in the men's 100m butterfly.
20-year-old Dressel touched 0.26 seconds outside Michael Phelp's world record set at the 2009 championships and 1.01 seconds ahead of his nearest challenger, Piero Codia of Italy.
Dressel produces powerhouse butterfly in Budapest
The semi-finals take place later on Friday.
I thought I was reading the board wrong, it’s the craziest thing.
In-form Dressel showed no signs of fatigue some 30 minutes earlier as he posted the second fastest time in qualifying for the 50m freestyle semi-finals.
Dubbed the "splash and dash", Dressel clocked 21.61 seconds, 0.10 seconds behind leading qualifier Bruno Fratus of Brazil.
"It was the best race I could pull off at 9:30 in the morning. I'm pretty glad with that," said Fratus.
Guy breaks British record in 100m butterfly heat
Sarah Sjostrom looked in commanding form as the super Swede advanced to the women’s 50m fly semi-finals, recording 25.25 seconds to take top spot in qualification.
Sjostrom is overwhelming favourite to land gold in the women's 100m freestyle final later as she attempts to break a milestone barrier for the second time at these championships.
I will aim to go under 52 seconds tonight but I think it will be impossible to break the world record again.
Kathleen Baker of the United States qualified fastest ahead of local hope Katinka Hosszu in the women's 200m backstroke semis.
Britain pipped by Australia in dramatic 4x200m relay finish
Baker's compatriot Katie Ledecky had plenty of energy to spare in the women's 800m freestyle preliminaries as the indefatigable American recorded eight minutes 20.24. Leah Smith of the U.S. was second fastest, 0.55 seconds back.
Australia qualified ahead of Britain for the men's 4x200m freestyle relay final.