That took exactly one tenth of a second off his previous record as all eight finalists set a season's best, personal best or national record.
Teenager Nijel Amos of Botswana claimed silver in a national record of 1:41.73 ahead of Kenya's Timothy Kitum, who claimed bronze.
Afterwards, Coe paid tribute to Rudisha's achievement, saying: 'That was simply an unbelievable performance. David Rudisha showed supreme physical and mental confidence to run like that in an Olympic final.
'Instead of just doing enough to win the race he wanted to do something extraordinary and go for the world record as well.
'Rudisha's run will go down in history as one of the greatest Olympic victories. I feel privileged to have witnessed it in London.'