Her eight-under-par final round took her to 16 under for the championship, six better than American Lexi Thompson.
Ko's world renowned coach David Leadbetter says the brilliant Kiwi will pile on the major victories after her breakthrough in France.
"It's definitely one of the top rounds of my whole entire life and I'm sure it will be for my career" said Ko after claiming a victory that puts her alongside Bob Charles and Michael Campbell as the only New Zealand winners of golf majors.
Despite being so young, her so-called failure to win a major in 16 previous attempts meant there was a question mark hanging over Ko.
But the world No 2 stormed to victory with a brilliant final round of 63, and at 18 years, four months and 20 days became the youngest woman to win a major.
The previous record was held by American Morgan Pressel, who was about six months older than Ko when she won the Kraft Nabisco in 2007.
Ko said she put the history-making aspect out of her mind and simply concentrated on the job at hand.
"It's very overwhelming - it's been an amazing week," she told Mike Hosking on NewstalkZB.
"It is an unbelievable experience to hold the trophy - it's been so amazing, a dream come true.
"There was a lot of talk about me being maybe the youngest major winner and I'm glad that's all gone now. Overall, I was just thinking about today's round. I've put my name in a little bit of history and it's a huge honour to have that. This has been a great week but I've still got to prepare for the next. Hopefully this is only the beginning."
Leadbetter was confident there was plenty more to come.
"She did everything right today. She did it in style," Leadbetter told RadioSport's Matt Brown.
"She made a steady start then put on the afterburners. It was amazing how she played. She conducted a clinic. She was three behind Lexi Thompson after eight holes.
"The difference between the greats and the really good players is when the pressure is on, they find that extra gear. That's what she was able to do and when she got her nose in front, I thought it was going to be very tough on Lexi.
""It was almost like the boxer versus the puncher. Lexi is the longest on tour and hits it a long way...she was 30 yards ahead of Lydia on average. It was almost like matchplay...Lydia would hit first and knock the ball close and put the pressure on Lexi.
"This has squashed all the questions about winning a major and the first one is always the toughest. I think she will respond it it very well. The first time I laid eyes on her I though wow, this girl has got some game. I've always said it was about when, not if.
"This is a confidence booster, knowing what she can do in the majors. She will go from strength to strength. The floodgates could really open. She's already won 13 tournaments around the world she knows she can do it, she will be more relaxed."
Starting the final round two shots behind Mi Hyang Lee, who dropped off the pace quickly.
Ko had the commentators in awe as they all shared their view on New Zealand's brightest golfing talent.
"Where's the weakness? Where's the nerves?", "I consider her a veteran of sorts" and "Magnificently boring" were some of the comments given.
Ko will take three weeks off, visit family in Korea, and then resume playing on the five-tournament Asian Swing. Leadbetter believes she intends returning to New Zealand in October and November to "celebrate with all her Kiwi friends."
"She was draped in the New Zealand flag, there was the New Zealand anthem, and she was very proud of that," said Leadbetter.
