Watt, the Commonwealth champion, made her break on the fifth and final lap of the 16-km circuit at Sant Sadurni d'Anoia to finish in 2hr 4min 42sec.
Longo took second place, 20 seconds behind to win her first Olympic medal. The 1988 Olympic champion, Monique Knol, of the Netherlands, finished in front of the main pack to win the bronze medal.
'There's nothing to compare with this,' Watt said. 'I thought I'd take the chance of riding aggressively. No one in the pack seemed to do anything, so I went for it.'
Longo, considered to be the greatest female rider of all time, said afterwards that she was not disappointed but that the other riders had not realised that Watt was ahead of them. 'Nobody knew that Kathy was out in front,' she said.
Longo said the medal made up for past failures. At Los Angeles in 1984 the chain came off her bike just before the finish and in Seoul she finished 21st after being troubled by injury. She still hopes to win a gold medal in the individual pursuit which starts on Thursday.
The German men's team of two former West Germans, Christian Meyer and Michael Rich, and two from the East, Bernd Dittert and Uwe Peschel, won the 100-km team time trial yesterday in 2hr 1min 39sec after trailing Italy for more than half the race.
The Italians, who beat the Germans at the world championships in Stuttgart last year, were unable to contain the Germans in the second half of the race. Italy finished a minute behind Germany, with France almost a further three minutes back in third.
Britain's squad of Gary Dighton, Stephen Farrell, Matthew Illingworth and Peter Longbottom finished 14th in 2:12.14.Reuse content