Canadian 17-year-old Summer McIntosh took the silver and Katie Ledecky of the United States the bronze. All three medallists were past or present world record holders.
"I'm just happy to get the result for myself and I feel so honoured to be a part of the race and be alongside legends like Katie," said Titmus.
"I look up to her so much as an athlete and there's certainly not a rivalry beyond the races. I really respect her as a person and I hope that I put on a good show tonight and everyone enjoyed it."
The medal was a first for teen sensation McIntosh, who finished fourth in Tokyo in 2021 as a 14-year-old and held the world record for four months last year until Titmus took it back.
Ledecky, the gold medallist at the 2016 Rio de Janeiro Games and second in Tokyo, now has 11 Olympic medals -- seven of them gold.
Titmus led all the way, fighting Ledecky initially but then McIntosh over the last 100.
The Australian was inside world record pace at the first turn, and again at the 250 mark, but her final time of three minutes 57.49 seconds was well outside her own mark of 3:55.38 set in Fukuoka, Japan, last year.
McIntosh hit the wall 0.88 behind with Ledecky fading to close at 4:00.86.
Not quite 'Race of the Century' but Titmus still golden
Compared to the epic men’s "Race of the Century" at the 2004 Athens Olympics, where Australian Ian Thorpe took gold in the 200m free ahead of Dutchman Pieter Van Den Hoogenband and the United States' Michael Phelps, the race came with massive hype and expectations that proved impossible to live up to.
"I probably felt the expectation and pressure for this race more than anything in my life to be honest and I'm pretty good at handling the pressure," said Titmus, who is unbeaten over the distance since 2019. "I definitely felt it, and the Olympics is different.
"It's not like anything else and it's not about how fast you go. It's about getting a hand on the wall first."
Competing in her fourth Olympics, Ledecky had fired a warning shot in the morning heats, posting the fastest time ahead of Titmus and signalling she was ready to reclaim the gold she won at the Rio Games that the Australian snatched from her in Tokyo.
"We knew it was going to be a great race going in, so many great competitors in that field," said Ledecky, rated one of the sport's all-time greats. "I knew it would be tough and everyone in that field put up a great race.
"Summer swam really really well, I haven't looked at how the whole race broke down, I could only see it from my lane but kudos to them on some great races."
Ledecky, now with 11 Olympic medals, and Titmus with six have raced many times over many distances, but Saturday's race had special significance being the third in their 400m free Olympic trilogy.
Titmus, her fingernails painted gold, stepped out onto the pool deck relaxed, smiling and waving to the raucous crowd, while Ledecky and McIntosh were emotionless and stern.
The Australian led all the way, fighting Ledecky initially but then McIntosh over the last 100, before getting to the wall first to become just the second woman and the first since Martha Norelius (1924, 1928) to win the event twice.