An enthralling encounter saw Canada recover from a goal down to lead 2-1, but USA forced OT when Monique Lamoureux-Morando levelled with six minutes to go.
And after the shootout finished 2-2 after five attempts, Lamoureux-Davidson’s finish was followed by a save from Meghan Agosta’s shot to end USA's 20-year wait for hockey gold.
It was the ultimate redemption for the US, who had lost to Canada in the previous two Olympic finals, with their neighbours having taken the past four titles dating back to Salt Lake City 2002, where they beat the Americans on their home soil.
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With 26 seconds left in the first period, Hilary Knight fired the US in front against their great rivals, but Canada turned the tie on its head in the second period.
A deflection off Haley Irwin from Blayre Turnbull’s shot put Canada level, while they were soon ahead thanks to Marie-Philip Poulin.
On this occasion, it was Canada who could not hold onto their lead, and after Lamoureux-Morando equalised, the clock ran down to signal OT.
But after 20 minutes, neither side could find an OT winner, and with the tie going down to a shootout, it came down to who could hold their nerve on the ice.
Tale of the penalty shootout
CAN - Natalie Spooner missed
USA - Gigi Marvin scored
CAN - Meghan Agosta scored
USA - Hannah Brandt missed
CAN - Marie-Philip Poulin missed
USA - Emily Pfalzer missed
CAN - Melodie Daoust scored
USA - Amanda Kessel scored
CAN - Brianne Jenner missed
USA - Hilary Knight missed
USA - Jocelyne Lamoureux-Davidson scored
CAN - Meghan Agosta missed