Wanyonyi blazed to a time of one minute 41.19 seconds, making him the third fastest man ever over the distance. The world silver medallist narrowly missed the world record of 1:40.91 set by Kenya's David Rudisha at the 2012 London Olympics, in laying down the fifth fastest time ever run.
Canada's world champion Marco Arop furiously tried to overtake the Kenyan over the final 100m, but finished one-hundredth of a second behind in 1:41.20.
Algeria's Djamel Sedjati, the favourite after going unbeaten all season and setting four world-leading times, made a tactical error in sitting near the back of the pack for too long and crossed the line in 1:41.50 for bronze.
Wanyonyi, who turned 19 nine days ago, boldly led from gun to tape as the first seven across the line were separated by about a second and a half and fifth-placed Bryce Hoppel set an American record.
Arop's silver was the Canadian's first medal in two Olympics. The 25-year-old was born in Sudan and forced by the civil war to flee with his family of eight when he was two years old.
Sedjati, who had been third quickest in history before Saturday, is known for his remarkable kick, but delayed his move too long and had to settle for bronze.
