The powerful Scot held off a spirited challenge from Germany's Maximilian Levy to romp to victory in front of a delirious crowd in Stratford, East London.
Simon van Velthooven of New Zealand and Teun Mulder of the Netherlands finished level for third and faced an agonising wait before both were given bronze.
It was Team GB's 22nd gold medal of these Games - seven of which have come on the cycling track - on a day that has seen them eclipse the 19-gold haul of Beijing to become the most successful British team since the 1908 Games, also in London.
Hoy's seven career Olympic medals put him level with Bradley Wiggins, but the 36-year-old cyclist has two more golds than his younger counterpart.
With six triumphs, Hoy overtakes rowing legend Sir Steve Redgrave as the Briton with the greatest number of career gold medals.
"The keirin is very much a lottery, you can make one mistake and it's gone," Sir Chris said after the race, which had fans at the velodrome gasping for air as he seemed to have been caught by Levy.
"I can't express the feelings I have right now. This is the perfect end to my Olympic career. If I'd stopped after Sydney I'd have been a happy boy.
"It's 99.99 per cent that I won't be at (the 2016 Olympics in Rio de Janeiro), so this is the perfect way to go."
It rounded off a wonderful day on the track for Britain, with Laura Trott claiming a sensational omnium gold medal, and Victoria Pendleton bowing out of cycling with silver in the individual sprint.
Hoy himself had won a team sprint gold earlier during the Games, although he was not allowed to defend his individual sprint title due to a rule change only allowing one participant from each nation.
It mattered not for Britain as team-mate Jason Kenny won that event.