"Super Dan", a day after beating his arch-rival Lee Chong Wei, bested a challenger five years his junior who is considered his successor at the top of the sport.
Chen went a game up in the all-Chinese final but Lin fought back to take the second before a show of power and agility in the decider took him home 12-21, 21-16, 21-16.
The tense conclusion to the world-standard competition left 25-year-old Chen without a win against the twice Olympic and five-time world champion in seven attempts.
"I'm very happy I took the gold medal -- Chen Long and I have had a difficult tournament because of the wind on the court, but we played a very good match for the crowd," said Lin, echoing complaints from several players in Incheon.
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Asked whether anyone else could replace him as a Chinese shuttling legend, Lin pointed to team-mate Chen.
After a match in which Lin Dan's name was being constantly yelled by the crowd, a gracious Chen said it did not upset him.
- Mesmerising duel -
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A confident Chen was in attacking mood in the first game, surging to an 11-4 lead. Lin failed to close out the points as Chen dug out returns and blocked powerful drives.
A flat Lin put the final two points in the net for Chen to take it 21-12.
The second game was a mesmerising duel as Lin closed Chen's early three-point lead and went into the break 11-8 up after a driving backhand pass followed by an unreturnable body shot.
Lin nonchalantly took the fire out of Chen's driving shots and beat him with lightning reflexes at the net before winning the game 21-16 with a cross-court smash.