The men's crew of Tate and David Smith, Murray Stewart and Jacob Clear fired off the start to beat favourites Hungary and Germany amid a cacophony of noise from the grandstands.
Roared on by a huge Hungarian contingent on the banks, the eight kayaks came through the last 100 metres with bodies straining forward, arms whirling, legs driving and water splashing everywhere as Australia prevailed in a close finish.
The race was the only one to go against the form book at a regatta dominated by the fight between Germany and Hungary.
With two days of finals complete, the sport which is often overshadowed by its more illustrious sister rowing, has awarded eight gold medals, three to Hungary and three to Germany. Norway took a gold on Wednesday.
"We knew we could do it," Tate Smith told reporters having helped lift Australia to 10th in the overall medals standings after a disappointing London Games so far.
"We had this belief for the last three years and it's the biggest race of our life. It's unbelievable. Australia's first gold in a team boat - that's massive," he added as the lake shimmered in the sun.
The victory against the traditional European powerhouses is all the more impressive as canoeing in Australia receives less funding than most other Olympic sports.
They took a gold and two bronzes in Beijing and have been boosted in recent years by surf lifesavers such as the four in the K4 moving into sprint flatwater canoeing.
"Day 13 and you finally want to talk to me," an Australian press officer said to reporters after the country failed to take a gold in rowing on the same course last week.
On Thursday the four men linked their arms and raised them to the skies as they stood on the podium, four years after David Smith cried hysterically after failing to make the Beijing final.
In the remaining races it was more business as usual.
Germany's Peter Kretschmer and Kurt Kuschela won the men's canoe double after they surged through the field in the middle of the race to beat the defending champions Andrei and Aliaksandr Bahdanovich of Belarus who took the silver.
In the women's events, Hungary's Danuta Kozak overcame a sleepless night to come from behind to also beat the defending champion, Ukraine's Inna Osypenko-Radomska, and add to the gold medal she won in the women's K4 on Wednesday.
"I couldn't sleep," she said. "I woke up at half past three. This was in my mind: I became an Olympic champion and at the finish line I looked around and nobody was around me. That feeling was incredible."
In the final race of the day however, Hungary failed to gain from their huge crowd support when Germany's Franziska Weber and Tina Dietze raced through their fierce rivals to claim the gold and make up for their defeat in the K4 on Wednesday.
Hungary's Katalin Kovacs and Natasa Douchev-Janics took silver.
"There has always been a rivalry between Hungary and Germany, and this feels better than good, better than awesome," said Weber. "There are more nations coming, but the rivalry between Hungary and Germany will continue."