Pajon, 24, roared on by hundreds of yellow-clad fans in the sun-bathed grandstand at Rio's X-Park, put not a wheel out of place as she pedalled to victory in the final, repeating her feat from London four years ago.
The Medellin flyer won all three runs in her semi-final to give her the best lane in the eight-rider showdown. Blasting out of the gate she quickly hit the front in the final and flowed smoothly over the humps and bumps to the finish line.
American Alise Post took the silver medal with Venezuela's Stefany Hernandez, who lost a chain after a crash in a semi-final run and had to walk across the line, claiming the bronze medal, sparking a fiesta for the South Americans.
"This is better than anything," Pajon, whose popularity in Colombia will soar even further after her gold, told reporters after the crowds joined her in belting out the country's anthem.
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"It's so beautiful. Already to win two gold medals it's just crazy. I raced well. I feel like I was at home with so many Colombian fans in the grandstands. It filled me with energy."
While Pajon dominated from start to finish, the men's event was turned upside-down when multiple crashes in Thursday's quarter-finals wiped out the hopes of double Olympic champion Maris Strombergs of Latvia and world champion Joris Daudet of France.
Australian duo Anthony Dean and Sam Willoughby, fiance of U.S. rider Post, both reached the final by winning each of the three runs in the semi-finals and looked set to contest gold.
But both struggled in the final as Americans Nicholas Long and Fields led the riders around the eye-catching green and red track in the hills above Rio.
Long was leading until halfway round the 399m circuit but Fields, who suffered a broken wrist in April, surged past his teammate on the penultimate corner.
Fields would not be caught, but Long was overtaken by Dutchman Jelle van Gorkom and Colombia's Carlos Alberto Ramirez Yepes over the final rollers as they took silver and bronze.
"I cannot even describe it. It is a moment that I dreamed about since I was 15 years old," Fields said.
"To finally hear the words 'Olympic champion' and then my name, it honestly feels like a dream. But tomorrow I am going to wake up, and it is going to be real."
(Reporting by Martyn Herman; Editing by Bill Rigby)
