The Team GB skeleton slider hurtled head-first down the run at about 90mph on nothing but a small sled, beating American racer Noelle Pikus-Pace by 0.97 seconds.
Afterwards the 25-year-old, from Sevenoaks, Kent, said: "I'm just so chuffed I am Olympic champion.
"My fourth run I was totally relaxed and I enjoyed it. It was a bit of a messy one, but I'm just so thrilled I got myself here after five years' hard work.
"As an athlete you do so much hard work, but it's worth it for days like this.
"It's also lovely as it's Valentine's Day, so it has something romantic about it as well.
"My mum and dad and my sisters are here and I couldn't have done it without them or the Team GB skeleton team. I'm Olympic champion!
"I believed in myself and put in the hard work and dedication before we came here.
"(My advice to anyone watching is) follow your dreams and never limit yourself to what you can achieve."
Yarnold's overnight lead had seemed to justify her status as the strongest British favourite for a Winter Olympic gold medal since Torvill and Dean triumphed in Sarajevo 30 years ago to the day.
Her success ensured British skeleton maintained the tradition of securing a medal in each of the six Olympic Games it has featured in, dating back to 1928.
Team GB are in 14th place in the medals table in Sochi, after 33-year-old Jenny Jones secured a bronze medal in the snowboarding event last Sunday.