With 50m left in the freestyle, Clareburt led by 1.67 seconds and powered home to win a historic gold medal. Smith took silver, 1.45 seconds behind the Kiwi, while Scotland's Duncan Scott earned bronze.
"To execute at the right time and the right place at the right moment, it's a pretty cool feeling," Clareburt said moments after the race. "To get the gold medal, a PB, the Games record and a Commonwealth record, I honestly never thought that would happen."
With victory, Clareburt ended a 16-year drought in the pool for Kiwi men, becoming the first to claim gold at the Commonwealth Games since Moss Burmester in 2006.
In the three editions since, Dame Sophie Pascoe has picked up five gold medals, with Lauren Boyle the only other New Zealand swimmer to stand atop the dais.
Pascoe was cheering on Clareburt from the stands after her victory last night, while Burmester and Boyle were heroes for a man who would now inspire the next generation.
"I grew up watching those two," Clareburt said. "Moss was my idol. He's the one that gave me the dream. When he used to come to Wellington and race a local competition, we used to watch him and wish we were that guy.
"It's pretty cool to be compared alongside Lauren and Moss - I feel like I'm a part of that group now."
Clareburt has for a few years loomed as likely to join that elite company.
He burst on the scene by winning bronze in the 400 IM on the Gold Coast four years ago, before coming agonisingly close to earning an Olympic medal last year.
In Tokyo, Clareburt swam a national-record time of 4:09.49 in the heats, which would have been good enough for silver the next day. But following a sleepless night, he struggled to find his usual explosiveness in the last lap of the final and faded to seventh.
The Wellingtonian confirmed he belonged in the top tier of medley swimmers at last month's world championships in Hungary, overcoming a bout of Covid to finish fourth in the 400 IM final with a time of 4:10.98.
"The last two months have been a rollercoaster," Clareburt said. "I got sick twice; at the world champs I did a good time but not as fast as I thought I could go.
"The last month of training has just been getting better and better, and I've been pumping out some good times. So I knew it was going to happen."
Clareburt will now turn his attention to the 200 IM, in which he finished seventh in Hungary after an eighth-place result in Tokyo.
Earlier in the evening session, 18-year-old Cameron Gray stunned Kiwi fans - and himself - by seizing bronze in the 50m butterfly.
Gray was the seventh-fastest qualifier for tonight's final and was swimming out of lane one, but produced a spectacular final 25m to earn a podium place by the finest of margins.
"I had to take my goggles off and get a better look," Gray said of his immediate reaction. "My vision's normally perfectly fine, but I just had to double check.
"It's just unreal. I didn't think I'd get this far so it's just a real treat."
Gray stopped the clock in a personal-best time of 23:27, 0.46s behind England's Ben Proud and 0.01s ahead of fourth-placed Dylan Carter.
"I thought I did a really good job in the semis and to top that performance would be really challenging, but I just surprised myself," Gray said.
The Games debutant was raucously greeted by Kiwi teammates in the mixed zone, wrapped in a flag and a hug by Dame Sophie Pascoe, and he hinted there would be a decent celebration to follow.
"Rumour has it that the boys are on tonight."
Later in the night, Andrew Jeffcoat fell agonisingly short of the podium in the men's 100m backstroke final, finishing in fourth place with a time of 54.13, just 0.07 seconds behind Australia's Bradley Woodward in third. South Africa's Pieter Coetze won with a time of 53.78.
