The 31-year-old from Stavanger, who was swept all before her this season, completed the 31.3 km ride along the dusty dirt tracks of Mount Parnitha, just north of Athens, in just under two hours.
Canada's Marie-Helene Premont took silver and Germany's 2003 world champion Sabine Spitz came third, stopping just before the end to bow to the crowd with a flourish before remounting and cycling over the finish line.
Double Olympic champion Paola Pezzo of Italy, who came out of retirement to defend her title, finished well down the field.
Dahle's gold was Norway's first in Olympic cycling since 1972 when Knut Knudsen won the men's individual pursuit on the track. It was their first of any colour since 1984, when Dag-Otto Lauritzen took bronze in the men's road race.
"I fell once and I damaged the gears which slowed me down a bit," Dahle said. "I had to get off the bike and push on some of the steepest parts of the course."
Dahle was cheered on by dozens of noisy Norwegian fans, including three women in bikinis, red grass skirts and horned Viking helmets who waved red, white and blue cheerleaders' pom-poms as their heroine rode to victory.
She was handed a Norwegian flag on the home straight and held it aloft with both arms as she crossed the line.
Premont upstaged her more famous Canadian team mate Alison Sydor, who failed to match her silver medal from Sydney.
"I knew I was on good form, I've been sleeping very well, I had a good mechanic, everything was just perfect here," said Premont, a 26-year-old from Quebec. "I wasn't under stress. I didn't have any pressure. I'm really happy."
Spitz said her plan had been to stick close to Dahle but realised within the first lap that the Norwegian, beaten only once in the World Cup this year, was too strong.
A rogue bee put paid to Dane Mette Andersen's chances.
She was stung early in the five-lap race and needed medical attention for swelling on the left side of her chest.