Olympic champion Chen Aisen was aiming to keep China’s golden exploits intact after Qiu Bo’s hat-trick of titles had matched American Greg Louganis' feat of more than 30 years ago.
However, Daley posted a personal-best points haul of 590.95, which included five 10s in a sizzling final dive, to secure his first individual global title for eight years when he won as a 15-year-old in Rome.
Daley, who failed to qualify for the Olympic final after a disastrous preliminary round last summer, told reporters: “I can put to bed Rio now and be like, 'Now I can move on my journey to Tokyo'.
“I saw Chen hit the water and thought, 'Oh, yes. If that's how you want to play it, I'm here to play, too'.”
Chen admitted that he thought he would win gold with his final-round tally of 106.20 before Daley equalled the mark and held two arms aloft.
Chen, bidding to become the first reigning Olympic champion to win the world title since compatriot Hu Jia in 2005, said: “It means I will have to go back to work and do better next time.”
Daley had earlier partnered Grace Reid to a surprise silver in the mixed 3-metre synchro springboard final. Wang Han and Li Zheng of China won gold.
China’s three medals in the final day of diving - Yang Jian also won bronze in the men’s 10-metre platform - meant that the powerhouse nation across springboard and platform finished well clear in the medal table.
Having claimed 37 of 40 gold medals in World Series events this year, China continued to dominate in Budapest, with eight golds and 15 medals in all. Russia finished second with 10 medals.
Meanwhile, the soon-to-be-renamed synchronised swimming events concluded on Saturday night with another Russian monopoly of world titles.
Russia garnered seven of the nine on offer, Svetlana Kolesnichenko proving the stand-out star of the show with two golds apiece in both solo and duet routines.
Earlier on Saturday, the sport’s governing body, Fina, had voted to drop "synchronised" and change the name of the sport to artistic swimming.
(Reporting by Rod Gilmour; Editing by Neville Dalton)
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