Rossi shot 99 of the 100 targets in the three qualifying sessions and 25 shot final to easily claim the gold at the Royal Artillery Barracks.
Slovakia's Zuzana Stefecekova was second and Delphine Reau of France third following a shootoff for the other medal places after they, along with Alessandra Perilli of San Marino, all finished on 93 hits.
It was heartbreak for Perilli who missed out on what would have been the first medal for San Marino at the Olympics.
There was no such nervy concerns for Rossi, the Italian police officer, who bettered the previous record mark of 96 set by Stefecekova in 2006 to leave her rivals trailing in her wake.
Rossi was on track to complete a perfect 100 shot before missing her 92nd shot of the day.
The 20-year-old former world number one was hugged by her coach after she successfully brought up pink smoke after hitting her 99th target on the outdoor range in southeast London.