The 29-year-old, who had also won in Sochi 2014, overcame dizzy spells to win her second successive women’s skeleton gold medal.
She also became the first Briton to successfully defend a Winter Olympics title.
Finishing four runs in 3 minutes, 27.28 seconds at Pyeongchang, she won by nearly half a second over Germany’s Jacqueline Loelling.
“I’m overwhelmed and exhausted,” she said after her win.
“I don’t really know how it happened.
“After the first run I wasn’t sure whether I was going to be able to finish the race because my chest infection was so bad I was struggling to breathe and I got here only with the help of my team.
“My physio Louise just gave me a talking to before run two (on Saturday) and reminded me that I can do it and we can do it together.
“I guess four years ago, three years ago, the whole team all dared to dream that this was possible and I just went with all them (and) we managed it.”
Yarnold had been trailing leader Janine Flock of Austria going into the fourth and final run but she made up the deficit to win by 0.45 seconds. Flock, meanwhile, slipped to fourth place.
The two embraced after the race, with Yarnold heard saying: “I’m sorry, I’m sorry” to console her competitor.
Yarnold, now Britain’s most decorated Winter Olympian, had tweeted hours before the race: “Got my eyes on the prize #OlympicFinal #DreamsComeTrue.”
British team-mate Laura Deas won bronze by 0.02 seconds, giving Britain two medals in the same event for the first time in Winter Olympics history.
The sport involves a short sprint on ice before the competitor dives onto a sled and proceeds to fly along the track at speeds of over 100km per hour.
British women have won a medal at every skeleton event since the sport was reintroduced to the Games in 2002, despite there being no skeleton racing track in the country.
With Izzy Atkin winninga bronze earlier, it is the first time ever that Britain have won three Winter Olympic medals in the same day. It had won two in Chamonix in 1924.
Britain’s other big hope for a medal, speed skater Elise Christie, crashed in the semi-finals of the 1500m, only days after doing the same in the 500m final.
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She fell badly but is hopeful of returning for the 1000m.