A packed Atakoy Arena also saw the return to the top of the podium of Russia's pole vault great Yelena Isinbayeva, although Chinese superstar Liu Xiang was beaten into silver in the men's 60m hurdles.
Lagat, a Kenyan-born 37-year-old, proved age was no barrier as he produced his trademark final kick to hold off Kenyan pair Augustine Choge and Edwin Soi in the 3000m.
It was a third indoor title for Lagat, his first coming back in 2004 when he was competing for the country of his birth.
"I might be 37 years old but my quick finish is not dying away!" said Lagat, who benefited from his conservative race tactics.
"I just wanted to make sure I stayed safe, ie not getting behind position seven or so and remaining in reach of the two Kenyans."
Britain's Mohamed Farah, the reigning world outdoor 5000m champion, had to be content with fourth and saw an appeal against Soi for obstruction overturned.
Other American gold medallists at the Atakoy Arena were Aries Merritt, who trumped Liu by four-hundredths, Will Claye (triple jump) and Brittney Reese (long jump), while the men's quartet won the 4x400m relay.
However, there was heartbreak for Ethiopian Meseret Defar in the women's 3000m, her bid for an unprecedented fifth consecutive title scuppered by Kenya's Hellen Onsando Obiri.
"I'm very disappointed and very sad," said Defar. "The last 200 metres were very hard."
Fresh from setting a new indoor world record, Isinbayeva dominated the pole vault to set out a sure warning to rivals ahead of the London Olympics.
The double Olympic and world champion came in at 4.70m, when 13 of the field were already out, just the other podium sitters - France's Vanessa Boslak and Briton Holly Bleasdale, clearing that height.
Isinbayeva then cleared 4.80m for gold and the bar was raised immediately to 5.02, but a further record was not on the cards as she narrowly failed all three attempts in her facile victory.
"I was waiting for this victory like a mother waiting to give birth to her baby," said Isinbayeva, who failed to medal at either the last two world outdoor championships in Daegu and Berlin or the Doha 2010 indoors after dominating the sport for so long.
"The last three years have shown me how important it is to win and I am as happy as if I were winning for the first time," she said.
"Today I understand better what I achieved in the past, how great this was and is."
Liu had to settle for silver behind Merritt in the hurdles, the American winning in 7.44sec.
"I knew he was a fast starter," said Liu. "So I got out in a rush and wasn't able to control my technique over the first hurdle.
"By the third one, I felt there was not chance for me."
Veronica Campbell-Brown of Jamaica retained her 60m crown by three-hundredths of a second from Ivorian Murielle Ahoure.
And there was the welcome sight of seeing Pamela Jelimo return to the form that saw her win Olympic gold at the age of 18, the Kenyan turning in a majestic performance to claim the women's 800m.
Reese produced a championship record leap of 7.23m to win the long jump, only two jumpers having gone further: Heike Dreschler and Galina Chistyakova in 1988 and 1989 respectively.
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