The 27-year-old, who won his first gold in Manchester in 2002, swam a Commonwealth Games record of 1.55.58 to head off New Zealand’s Gareth Kean by a clear two seconds.
It was England’s third gold in two days after Fran Halsall and Liam Tancock both won their events on Tuesday.
“I knew I had a one-minute-55 time in me, but I still think I can go quicker,” said Goddard, who missed August’s European Championships in Budapest because of a virus.
“I’ve had a shoulder problem for the last year, it’s been playing up for the last few days, and I’m so happy. I knew it was going to be quite a tight field. I’m so chuffed with the time.”
Halsall, meanwhile, blamed a touch of Delhi belly for missing out on the chance for a double gold after settling for bronze in the women’s 100m freestyle behind Australian pair Alicia Coutts and Emily Seebohm.
“I came down with a bit of a tummy bug and had nothing to give today, I pretty much couldn’t stand up after my final,” she said.
Meanwhile, Gemma Spofforth began as favourite for gold in the women’s 100m backstroke, but had to settle for silver behind Seebohm.
Elsewhere, Luke Folwell and Reiss Beckford delivered gymnastics gold and silver for England in the men’s all-round individual final, while Steve Scott and Stevan Watson took England’s first shooting gold of the Games with victory in the men’s double trap pairs event.
Sixteen-year-old Zoe Smith won bronze in the women’s 58kg weightlifting and England’s Myroslav Dykun took the men’s 66kg Greco-Roman wrestling gold.