Zagitova, 16, set a world record to claim gold at last year's Pyeongchang Winter Games but fell three times in her free skate at the 2018 championships and finished fifth overall in her only loss for that season.
Skating a haunting programme to "The Phantom of the Opera," Zagitova had some trouble with her initial combination triple Lutz and triple toe loop.
However, she clinched the rest of her programme, including a triple flip and double axel, to finish on 82.08 points and embraced her coach as she left the ice at the Saitama Super Arena outside of Tokyo.
Zagitova, who finished second in the 2018 Grand Prix Final after Rika Kihira of Japan, told the International Skating Union (ISU) she had "some rough practices" before the competition.
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"I didn't always skate so well in the short programme this season, there were some under-rotations or other little errors," she added.
"Here, I skated with joy, I didn't have to hold back. The audience was great."
The ladies championship this year was left wide open with 2018 champion Kaetlyn Osmond of Canada sitting out the season, but Zagitova - who set four world records this season under a new points system - was heavily favoured going in.
Second went to 18-year-old Kaori Sakamoto of Japan, whose flowing programme before an ecstatic home crowd gave her 76.86 points.
"I'm very satisfied that I was able to extend my personal best on such a big stage," Sakamoto said.
"No matter what the results were, I wanted to skate like myself, and I did that, so I'm happy."
FLUID ROUTINE
Elizabet Tursynbaeva of Kazakhstan was third with 75.96 points after a lyrical and fluid routine. The 19-year-old became the first Kazakh ladies skater to ever make the podium when she took bronze at the Four Continents meet in February.
"I love the ice here and I love skating in Japan and it helped me reach my season's best," she said.
Russia's Evgenia Medvedeva, 19, who won silver in Pyeongchang, finished fourth.
Kihira, 16, whose stellar season has seen her win every international meet she has entered, turned her opening triple axel into a single and fell to seventh.
Russian pair Evgenia Tarasova and Vladimir Morozov took a commanding lead after the short programme after a fall left French favourites Vanessa James and Morgan Cipres in seventh.
James and Cipres, undefeated this season and the first French pair to win the European Championship in over 80 years, went down when James botched the landing on their throw triple flip and fell to the ice.
James later said a collision with Italy's Matteo Guarise during the warm-up prior to their performance had rattled her.
"I didn't see Matteo, Matteo didn't see me so we crashed and I fell," she said. "It took me off a little and I was not very comfortable after. I felt a little dizzy, so I tried to stay focussed.
"It was a bad skate for us today, and with the fall it was very tiring after."
(Editing by Peter Rutherford/Ken Ferris and Christian Radnedge)
