Shiffrin, 23, was only third after the first run but produced an electrifying second leg to claim victory by 0.58 seconds from Swede Anna Swenn Larsson.
She ended the championships with two golds, having won the Super-G, and a bronze from the giant slalom.
Her victory was all the more impressive as she said she had been battling a lung infection and "run out of oxygen" towards the end of her surge for victory.
"It was tough to breathe without coughing, I was just fighting to stay in the course, it was tough today," she said.
"My skiing, especially in the second run was really good, I was pushing really hard."
Shiffrin joins Belgian-born German Christl Cranz, who dominated skiing in the 1930s, as the only Alpine skier to have won a specific event at four world championships.
Shiffrin's victory made her only the third American woman to win two golds at the same world championships, after Lindsey Vonn (2009) and Andrea Mead Lawrence (1952).
BIG MISTAKE
Slovakia's Petra Vlhova, who beat Shiffrin to gold in the giant slalom, was a full second back in third place.
"When I crossed the finish I couldn't believe that I had a chance of a medal because I took risks and made mistakes," Vlhova, Slovakia's first Alpine skiing world champion, said.
Swiss Wendy Holdener, who had clocked the fastest time in a rain-hit first leg, saw her chances of a third gold medal vanish as she made a big mistake early in the last run of the day.
Austria's Katharina Liensberger was fourth, meaning the Alpine powerhouse nation ended the championships without a medal from the women's races for the first time since 1982.
Rain, poor visibility and a rutted course proved too much for most of the skiers in the morning run, leaving the battle for gold between the fastest six who were separated by only 0.56 seconds heading into the decisive action.
With the sun finally making an appearance, slalom queen Shiffrin found the perfect rhythm as she powered through the gates, hardly putting a ski out of place.
When she crossed the line more than a second clear of Vlhova she looked completely spent, laying in the snow to catch her breath before climbing to her feet to watch the last two runs.
Larsson's advantage quickly disappeared on the split times but the Swede, roared on by the home crowd, held her run together and celebrated wildly as she crossed the line with a medal guaranteed, even if it was not the gold she craved.
It was left to Holdener, bidding for a third gold from the championships, to deny Shiffrin, but she missed a gate early in her run and slipped down to 17th overall.
Austria have one more chance to claim a gold medal from the championships when Marcel Hirscher starts as favourite in the men's slalom race on Sunday.
(Reporting by Martyn Herman in London; Editing by Ken Ferris)
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