Watched by 36,000 spectators, Svindal kept a near-perfect line down the icy and bumpy 3.33-kilometre course despite foggy conditions that caused problems for several other skiers.
The Norwegian finished in two minutes 1.32 seconds to win by nearly half a second and secure his second world downhill title, after also winning the marquee event in 2007. It was his fifth world title overall, to go with an Olympic gold in super-G.
Dominik Paris of Italy, who leads this season's World Cup downhill standings, trailed Svindal by 0.46 in second. David Poisson of France finished third, 0.97 behind.
"I knew I could not have skied better here," said Svindal, who raised both arms in the air and shouted out in celebration immediately after his run. "I took a lot of risks. It was a tough race. Visibility wasn't good and the course was difficult. At the finish, I was exhausted, in my head as well."
His dad, Bjoern Svindal, was among the first to offer congratulations in the finish area.
"It's unbelievable," Bjoern Svindal said. "I knew from the start that he was going to do something special. He was very focused. I expected a medal as he had already done well in the super-G."
The rest of the field, led by Klaus Kroell of Austria in fourth, finished more than a second off Svindal's winning time.
Defending champion Erik Guay of Mont. Tremblant,. Que., failed to finish. He narrowly avoided a crash and later missed a gate. Guay remains with 19 career World Cup podium finishes, one short of the Canadian record held by Steve Podborski.
Calgary's Jan Hudec, was ninth while Ben Thomsen, of Invermere, B.C., finished 17th, one spot ahead of Vancouver's Manuel Osborne-Paradis.
"I'm really disappointed,” said Hudec, who won a downhill silver medal in '07 at Are, Sweden. “I knew I had a chance to be on the podium and that's how I skied. I just had some bad luck today and that's ski racing.
“About 25 seconds into the race I thought it was snowing a lot. I think I was just sweating under my helmet from the warmup. I couldn't see. It was already bad visibility but I couldn't see anything. It was just bad luck.”
Svindal had to settle for bronze in Wednesday's super-G, a discipline he has dominated on the World Cup this season, and said that gave him extra motivation for the downhill.
"Winning bronze was nice but I was also a bit frustrated," Svindal said. "I really pushed hard today and avoided major mistakes."
He was about the only one to do so, as most other racers struggled to maintain their racing line on the turning and icy bottom section.
The low final right turn seemed to cause the most problems, as many skiers had to slow down to make the final gate before the finish.
Andreas Romar of Finland, who started seventh, became the first to master that section flawlessly and was in the lead until Poisson came down.
When it was Svindal's turn, the Norwegian stretched his lead at every split time and was also near-perfect in the finish section.
Svindal has now won 11 medals at major championship, still nine short of the all-time record held by compatriot Kjetil Andre Aamodt, who watched the race from the stands.
Paris, who won the downhill races in Bormio and Kitzbuehel this season, lost time to the Norwegian toward the end but said he had "a great race."
"I tried to go for a medal but I didn't think I could do it," Paris said. "I saved energy in the upper part because I knew I needed it for that difficult finish section."
Paris' teammate Christof Innerhofer, who also won two World Cup downhills this season, trailed Svindal from the start and finished 2.08 behind in 14th.
Poisson had never been on the podium on the World Cup or at a major championship before earning France a second medal this week, following Gauthier De Tessieres' silver in the super-G.
"This is really perfect. Gauthier started the week well for us," Poisson said. "I am proud of my run, I was fast and I went to my limits."
Kroell's fourth-place finish left the host country without a gold medal in a speed event of any major championship since the 2003 worlds, when Michael Walchhofer won the downhill and Stephan Eberharter the super-G.
Walchhofer's silver medal at the 2006 Turin Olympics downhill remains the last speed medal for Austria.
"I am very disappointed," said Kroell, last season's World Cup downhill champion who grew up in a nearby village. "I had a big mistake early on and I didn't find my flow because of all the bumps. I just couldn't keep the line."
Kroell's teammate Hannes Reichelt, who was fastest in the first training Thursday, was already 0.76 behind Svindal when he leaned back on a jump. The Austrian could not regain his balance to make the next gate.
Guay lost the chance of defending his title when he almost fell. He pushed himself back up with his right arm to stay in the race.
"I was in my transition, the ski hooked and that was the end of it," Guay said. "I was on my side. It's as quick as a blink of an eye sometimes."
With 2005 champion Bode Miller of the U.S. sitting out the season to recover from knee surgery, the Americans failed to make an impact.
Less than two hours before the start of the race, Andrew Weibrecht posted the fastest time in an additional 50-second training run on the difficult, turning bottom part of the course. But the American only managed 22nd in the race, 3.25 seconds behind Svindal.
"It's definitely one of the rougher courses we ski. The bumps were frozen up," Weibrecht said. "There was flat light, it was overcast, so you were kind of going into stuff and you can't see it."
Marco Sullivan slid off course when his left ski lost contact with the snow in a right turn. He landed in the safety nets but got up immediately and remained unhurt.
"I am not really sure what happened," Sullivan said. "My ski got clicked out. The next thing was I saw the fence coming."
The women's downhill is Sunday with Larisa Yurkiw, of Owen Sound, Ont., the lone Canadian entered.