Agnel, whose stunning anchor leg swim won France the 4x100 freestyle relay the previous night, led all the way to win the gold in a time of one minutes 43.14 seconds, 1.14 outside Paul Biedermann's world record, set at the 2009 world championships in Rome when the now-banned polyurethane bodysuits were allowed.
China's Sun Yang, who won the 400 freestyle on Saturday, dead-heated for second with South Korea's Park Tae-hwan in 1:44.93 while American world champion Ryan Lochte was fourth.
The 200 requires a combination of speed, stamina and tactical nous and Agnel had all three in abundance, dictating the race from the outset then bursting clear of his rivals on the final lap to provide France with their third gold medal in London's Aquatic Centre.
Meanwhile, Michael Phelps did not compete in any of the medal races but safely booked his spot in Tuesday's 200m butterfly final where he can equal Soviet gymnast Larisa Latynina's long-standing Olympic record of 18 career medals.
After crawling through the first two laps of his favourite event in the middle of the field, he turned on the power in the last two lengths to win his semi-final in one minute, 54.43 seconds.
That left him fourth fastest overall behind Japan's Takeshi Matsuda, who set the pace at 1:54.25.
The 200 butterfly is one of the most physically demanding events in swimming but is also Phelps' favourite.
He swam it at the Sydney Olympics when he was just a 15-year-old and has won the gold at the last two Olympics.
"When I came out of the first 100 I looked up at the scoreboard and saw the time, so very, very slow. I wanted to put myself in a good position for the final," he said.
"I was out pretty slow. I'll have to have a different strategy for tomorrow."
By his standards in Beijing, where he won eight gold medals, Phelps has had a slow start in London.
He finished fourth in the 400 individual medley then was part of the silver medal winning 4x100 freestyle relay team, but if he wins Tuesday's butterfly final, he will become the first male swimmer to win gold in the same individual event at three successive Olympics.
"I made my first Olympic team in this. The shorter races are a lot better for me now that I'm older," he said.
"I feel a lot better now. I'm a lot happier. I'm back on track."
- Michael Phelps