Hoy, Philip Hindes and Jason Kenny progressed to the final of the three-man, three-lap Team Sprint in a world record of 42.747.
The British trio clocked another world record in a stunning finale, finishing in 42.600.
In a repeat of the final four years ago in Beijing, France's Gregory Bauge, Michael D'Almeida and Kevin Sireau won silver, finishing in 43.013.
Hoy, 36 and competing in his fourth Games, won 1km Time Trial gold in Athens in 2004, three titles in Beijing and has now drawn level with rower Steve Redgrave as the Briton with the most Games golds.
Kenny now has a second Olympic gold and third medal in all, while for Hindes it capped a remarkable period after a rapid rise to prominence, not least today after he fell to the track after a wobbly start to qualifying.
Bronze went to Germany, who managed 43.209, with world champions Australia clocking 43.355 for fourth.
Hoy said: 'When I crossed the line, I didn't have to look at the scoreboard, I knew we'd won. I thought my first win in Athens was the most memorable for me, but this by far is my greatest win.
'It's an incredible feeling.'
I thought my first win in Athens was the most memorable for me, but this by far is my greatest win.Chris Hoy