The pair, skating at PyeongChang 2018 in their last Olympic Winter Games, scored 83.67 points for their sizzling Latin-themed routine, breaking their previous record mark of 82.68.
They edged out rivals Gabriella Papadakis and Guillaume Cizeron (FRA) – whose stellar skate had the audience clapping along to the Ed Sheeran soundtrack that accompanied their routine - by less than two points. The French pair was awarded 81.93 by the judges.
“I think there is something about taking time away and gaining perspective and also it's a testament to our team in Montreal and our coaches Marie-France (Dubreuil) and Patrice (Lauzon). They really set us up for this moment. We are so prepared and we are savouring every bit of it,” said Tessa Virtue.
With regards to setting a new world record, Moir added: "That's something we are really proud of. That is every athlete's goal here and to come out and do the best you can. And to do it on this stage, we're really, really proud of that. We know our work isn't over. It's a long event. The biggest chunk is tomorrow and we have to stay on our game."
Madison Hubbell and Zachary Donohue (USA) claimed third place with a score of 77.75 that was just enough to put them above compatriots, Maia and Alex Shibutani, by 0.02 points.
Virtue and Moir collectively have two individual Olympic medals – gold from Vancouver in 2010 and silver in Sochi four years ago – as well as a team silver from Sochi to go with the key role they played in Canada's team trophy gold earlier in the week in PyeongChang.
These Olympics had been billed as a showdown between the Canadian and French pairs, with figure skating experts believing a loss for Virtue and Moir would signal a generational change in the sport.
The Canadians told reporters before the start of competition that after a stinging loss to the French in the Nagoya Grand Prix Final last December, they went back and changed their programme, mainly to improve transitions to make both the short and free skates more fluid and seamless.
The mixed ice dance competition concludes tomorrow with a second discipline, free dance, to determine the final results.