Muhammad, gold medallist at the Rio de Janeiro Games, shattered the previous best of 52.34 set by Russia’s Yuliya Pechonkina in 2003.
“I’m just shocked,” Muhammad said afterwards. “My coach kept telling me (the record) was there. I just had to trust that and go for it.
“I wanted it so bad I knew I had to go out there and prove myself.”
With puddles of water on the Drake Stadium track after showers earlier in the afternoon, the 29-year-old Muhammad set a blistering pace from the outset, and hit the final straight with a clear lead from rising star Sydney McLaughlin.
McLaughlin, who had beaten Muhammad in the final few strides of this season’s Oslo Diamond League meeting, never looked like closing the gap as the New Yorker powered home.
McLaughlin finished second in 52.88sec with Ashley Spencer third in 53.11.