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Video - China women win team gymantics
China overcame an injury-ravaged United States team to clinch their first women's team gymnastics Olympic title.
Cheng Fei fell from the balance beam but China still beat the world champions by 2.375 points, while 2004 champions Romania settled for bronze.
The United States entered the final with only four fit gymnasts, and major errors on the balance beam and floor exercise ended their chances of gold.
Reigning champions Romania won bronze, five points behind the Americans.
With the two best gymnasts in the world and the Olympic gold medal at their fingertips, the Americans folded under pressure.
They went before the Chinese in the final rotation, the floor exercise - and after team captain Alicia Sacramone landed her second pass flat on her back, the gold medal was gone.
But US team coordinator Martha Karolyi believes America would have won gold if officials had not disrupted Sacramone's preparations.
Karolyi said: "First they called her name up, then they did not even put her name up even though the Chinese had finished, (it was) totally unusual holding."
"She was mentally prepared and then she had a mental break, then after not doing the job on the beam, her concentration for the floor exercise was bothered."
Sacramone fell off the beam trying to perform a backward jumping mount and admitted that the delay had caused her to lose her concentration and that, as a knock on, it affected her performance on the final exercise.
"I was just really eager to do my routine, but they did hold me for quite some time and I guess I lost my nerve a little bit," said the 20-year-old.
"I guess it was just a little bit too hard to get out of that funk, it affected me on floor a little bit."
To compound their misery, Sacromone's floor problems triggered errors from Shawn Johnson - the reigning all-around and floor world champion - and Nastia Liukin who both stepped out of bounds.
That meant China's final three routines were mere victory dances, and Deng Linlin, Jiang Yuyuan and Cheng Fei played the part to perfection.
Chinese coach Lu Shanzhen, who has transformed a team that failed to win a single gymnastic medal in Athens four years ago, said the victory was an historic moment: "I'm really excited, this is the strongest team we've ever had and we've won the most important medal on home soil.
"The gold medal could attract more children to gymnastics in China and we will be even stronger in the future."
It has also been revealed that Chellsie Memmel competed for the US with a broken bone in her right ankle.
The 2003 world champion on the bars injured her ankle during training on 4 August but competed in both the preliminaries and team finals.
"I just had to believe in myself and know that I could do it," she said.
"I have mixed emotions, I would have loved to compete on four events, but the silver medal for my team is great."
China finished with a total of 188.900, with the United States on 186.525.