The margin of victory is the smallest to decide a gold medal in men's or women's diving at any worlds. He totalled 307.10 points to reclaim the title the Chinese diver first won in 2007.
"I'm a little surprised by the result of the day," He said. "But I am very happy. I haven't thought about (the margin of victory). I can't even believe that I have the gold medal."
He has won four career world medals in various diving events. She also took gold at the 2012 Olympics in three-metre synchronized springboard and silver in the three-metre individual springboard.
Cagnotto won her second silver at these worlds with 307 points. She finished second with Francesca Dallape in the women's three-metre synchronized springboard Saturday.
Wang Han of China took bronze with 297.75, adding to her silver in 2011 and bronze in 2009 at this event.
"I wish diving wouldn't be that close because it hurts," Cagnotto said. "Of course I am a little disappointed because I don't know if I will have more chances like this to win a world championship. But if I think about my year and how I really took it easy and didn't come here in shape, it's OK."
Pamela Ware of Beloeil, Que., finished fifth with 261.45 points. Ware won the bronze medal in the three-metre synchro with Jennifer Abel of Laval, Que., on Saturday and will compete in the individual three-metre event Friday.
"I feel confident," she said. "My takeoffs and hurdles, which have been problematic lately, have been really good this week.
"That augurs well for Friday."
China has won four of the five diving golds so far at the Montjuic pool, and is poised to win another after Qin Kai and He Chong dominated the preliminaries in the men's three-metre synchronized springboard earlier Tuesday.
He started well with an inward pike with 1 1/2 somersaults to lead by more than three points from Cagnotto and Wang.
However, Cagnotto entered the final round with a five-point lead over He. She looked set to win her first world title after a reverse pike with 1 1/2 somersaults drew wild cheers from the smattering of Italian fans.
But on the last dive, He nailed a difficult reverse with 1 1/2 somersaults and 1 1/2 twists for 66.30 points, the highest single score of the final.
Cagnotto said she's had to deal with bigger blows than this.
"I already had this kind of experience in London, but it was worse because I was 0.20 behind the bronze," she said. "(Today) I'm happy and satisfied. This is the first time I got so close to the Chinese, and it is an honour to be so close to them."