Shi tied with He in the first two dives, before the 24-year-old pushed ahead in her third to achieve 84 points, the highest score, and eventually reached a total of 406.05, 18.15 points ahead of He and 103.2 points more than the last-placed diver.
The gold is the second for the 24-year-old, who won her first on the second day of the Games with team mate Wu Minxia in the 3 metre synchronised springboard event.
Shi becomes the third woman after Wu and retired Chinese diver Guo Jingjing to win gold in the 3 metre synchronised and individual events.
Shi said the two medals made her feel like she had fulfilled her responsibility to those who helped her along the way, but the Chinese added that she had not performed at her best.
"I would give myself a score of 80 today because I was very nervous. While my first few dives were okay, my heart felt quite unsteady during the others," she told reporters.
"Because it's the Olympic final, wanting to win it affects your state of mind."
NO TEARS
Shi said that while she did not shed tears during her individual victory, she had cried after her win with Wu, the Olympics' most decorated female diver.
"Because although a win in that event was safer, accidents can always happen...That was the hard work of two people, and we've seen how hard it is for big sister Xia," she said.
The medal tables in diving are dominated by China. They have won every gold in the women's individual event since the 1988 Seoul Olympics and every silver since the 2000 Sydney Games.
He, who accepted a marriage proposal from boyfriend and team mate Qin Kai at the medal ceremony, had also claimed silver in the event at the London 2012 Games.
Participating in her fifth Olympics, this is the first individual medal for Italy's Cagnotto, who also won a silver in the synchronised 3 metre springboard event a week ago.
Cagnotto battled with Jennifer Abel of Canada for third place throughout the event, finally coming up out on top in her final dive and winning with a 5.55 point advantage.
(Reporting by Brenda Goh; Editing by Andrew Hay and Ken Ferris)
