The Moroccan cut three seconds off Noureddine Morceli's last mark from the record books, which the Algerian set in Paris in July 1995.
The 1500m world champion, who had already taken the 1500m and mile world records from Morceli, removed the Algerian's last mark from the record books, making him the only athlete to hold three world records.
The 24-year-old Moroccan, ran the last 600m well ahead of the rest of the field to claim the record, with the Kenyan Paul Bitok a distant second.
"That's the sort of time I had in mind. The conditions were perfect," he said. "I just concentrated on my race and knew it would be a world record."
"My goal for this year was to hold all the world records from the 1500 to the 2,000," he added. "Eventually I want to have them all from the 1500 to the 5,000."
However, there was disappointment for Britain's John Mayock, who finished seventh in the event with a time of 4:58.57.
Denmark's Wilson Kipketer and Romania's Gabriela Szabo had earlier completed their seventh Golden League victories to share the $1m (pounds 625,000) jackpot.
Kipketer, the 800m world champion and record holder, kicked for home with 300m remaining in 1:44.03 and just held off a fast finish from Kenya's Japhet Kimutai.
The Kenyan-born Kipketer, who last year contracted a severe case of malaria, said: "It means a lot for me. Getting back into it was hard. I had to start again from zero this year. I don't care about the money. I care about running."
Szabo won the 5,000m in similar fashion, kicking 300m from home to win in 14:40.59 - the fastest time in the world this year. As in Seville, where she won the world title, her close friend Zahra Ouaziz of Morocco finished second, but Paula Radcliffe, Britain's 10,000m world silver medallist, finished in a disappointing eighth place.
"It's something special for me - it's a fantastic feeling," said Szabo. "It was a hard race for me tonight, but I am strong and I trained hard for this."
Szabo - who admitted fatigue as the long season winds to an close - then left the news conference room in a hurry to watch Kipketer's race. After he won, she hugged him.
The meet boasted 18 gold medallists from the world championships, including the American double sprint champion Maurice Greene. However, neither America's Michael Johnson nor Frankie Fredericks of Namibia entered the event.
Greene opted to run the 200m instead of the 100m and won easily in a relatively slow time of 20.21. In the process he beat the Brazilian Claudinei Da Silva into second place and Bruny Surin of Canada was third.
"I just wanted a win - the time wasn't important," said Greene. "I'm just preparing to win the 100 and 200 next year at the Olympics."
Surin, the world 100m silver medallist, went on to win the shorter sprint in 10.07.
Diane Modahl added to the British mood of disappointment by finishing ninth behind Maria Mutola, who won the 800m in a time of 1:57.56.
This season had started in pain for El Guerrouj with a bout of haemorrhoids which left him on the sidelines for a month. "In the end the break turned out to be a good thing," he said. "During that period I found the strength to achieve my goals."
It has been a great year for El Guerrouj since then, after setting the mile world record of 3:43.13 in Rome last July and then going on to defend his 1500m world title in the heat of Seville last month.
He was awarded Senegal's Excellence Award yesterday, which is given to a leading African athlete. El Guerrouj succeeded Fredericks.
El Guerrouj said that his target for next year would be to concentrate on achieving the one major title to so far elude him, an Olympic gold medal in Sydney.