Hanging with the leaders at the 150-metre turn, Titmus overtook Hong Kong's Siobhán Haughey in the final 25 m to establish a new Olympic Record of 1:53.50.
Despite leading for the first three laps, Haughey was unable to catch a fast-finishing Titmus near the wall, winning silver in an Asian record of 1:53.92.
Italy's world-record holder Federica Pellegrini grabbed the penultimate spot of the top eight in 1:55.91 with Titmus' teammate Madison Wilson (1:56.39) trailing her to round out the field.
Up to two swimmers per National Olympic Committee (NOC) can automatically qualify by swimming that time at an approved qualification event.
Up to one swimmer per NOC meeting that time is eligible for selection, allocated by world ranking until the maximum quota for all swimming events is reached.