Mollie O’Callaghan held her nerve – and held off star teammate Ariarne Titmus – to claim gold in an epic women’s 200m final that lived up to the hype.

O’Callaghan stormed to an Olympic record time with a brilliant final 50m, outlasting second-placed Titmus by 0.54 seconds.

The duo embraced in the pool, with O’Callaghan initially reserved as she took in the weight of the achievement and hugging Titmus.

The 20-year-old then unleashed a beaming smile and climbed out onto the pooldeck to celebrate her victory.

O’Callaghan and Titmus linked hands and gestured to the crowd to rapturous applause after the much-anticipated showdown.

Dean Boxall – coach of both athletes – gave a thumbs-up from the crowd after securing the 1-2 finish, and later embraced both swimmers.

“It’s such an honour... Arnie’s an absolute gun,” O’Callaghan said after the race.

“She races like an absolute beast. It’s an honour to train alongside her.”

The pair became the first Aussie duo to secure a 1-2 finish in an Olympic race since Ian Thorpe and Grant Hackett in the 400m freestyle in Athens 20 years ago.

O’Callaghan said she had been proud of the way she dealt with the pressure of the final and how she overcame Titmus, who snatched the 200m freestyle world record from her last month.

“You’ve just got to accept the challenge. You can either run or you can fight, and I chose to fight,” O’Callaghan said.

“I’m always striving for more and I always put a lot of pressure on myself. My expectations are very high.

“I did it for the country, I didn’t do it for myself. I’m racing for all these people.”

The result meant Titmus narrowly missed out on becoming the first Australian to win back-to-back Olympic gold medals in two events, following her twin 400m freestyle golds at the past two Games and her 200m triumph in Tokyo.

Titmus was typically classy despite falling short of making history.

“I know what it’s like to be Olympic champion and I’m honestly so happy for her,” Titmus said.

The duo linked arms at the medal ceremony during the national anthem after O’Callaghan invited Titmus to share the top podium with her.

O’Callaghan will have a chance to add to the four gold medals she possesses at age 20 - a new mark for the youngest-ever Aussie to own four golds - when she starts as favourite for the 100m freestyle event.

“I’ve got to stay steady and calm,” O’Callaghan said.

“I have got the 100 free tomorrow so I have got to keep collected.

“I’ve got so much more to go.”

Earlier, West Aussie Iona Anderson produced a strong semifinal swim to qualify fourth-fastest for the 100m backstroke final.

The 18-year-old was far from overawed at her first Olympics and will now look to upset fellow Aussie Kaylee McKeown in Wednesday morning’s (WA time) deciding race.

Australia’s Ella Ramsay finished fifth in the women’s 400m individual medley final, won in dominant fashion by Canadian Summer McIntosh.

Compatriot Max Guiliani was seventh in the men’s 200m freestyle final, with Romania’s David Popovici edging home for the gold medal by just 0.02 seconds.