The unheralded Mo, who burst onto the international scene with a brilliant display of speed and poise, clocked a combined time of 69.82 seconds for his two blistering runs.
The silver went to Keiichiro Nagashima of Japan in 69.98, with his compatriot Joji Kato taking bronze in 70.01, three-hundredths of a second faster than Lee Kang-seok of South Korea.
After claiming his unexpected victory, Mo donned a colourful helmet - thrown on to the track for him by Dutch fands - and draped the Korean flag around his shoulders for an exultant victory lap.
"A spectator from the Netherlands gave me that helmet, threw it to the ice rink after I'd won so I just put it on my head to celebrate," Mo said.
"Things that I can't really believe are happening. To me it was very surprising.
"I absolutely did not expect this. I maybe dreamed of it and imagined it, but I never expected this would actually happen.
"Since I now have this medal in the 500, I'm even more confident going into my other events," he said, looking ahead to the 1,000 and 1,500 metres.
Mo overshadowed compatriots Lee and Lee Kyou-hyuk, who finished 15th. They came to Vancouver as favourites, ranked one and two in the world respectively.
The newcomer, who was without a podium finish in any major 500-metres race, registered the first gold medal for South Korea in a Winter Games discipline other than short-track speed skating, where they have won 18 titles.
The young Korean stood in second place after the opening heat when he served notice with a run of 34.92.
Racing against sentimental home-crowd favourite Jeremy Wotherspoon, the Canadian world record holder, Mo powered his way to a time of 34.906 to claim victory.
Wotherspoon, who won Olympic silver in the 500 at the 1998 Nagano Games, finished ninth 0.46 of a second off the pace.
"The finish was disappointing. I was just sitting there, analysing what went wrong. I was wondering where my skating went," he said, adding that he was not sure whether he would race again after his 1000m in Vancouver.
"I felt a little disappointed today. Desire's wavering."