Wotherspoon of Canada saw his chances of a medal evaporate on Monday when he crashed out of the first of the two races.
FitzRandolph, a friend and training partner of Wotherspoon, admitted he was distraught to see his opponent tumble out of medal contention.
But he was clearly in no mood to let the opportunity for gold slip through his fingers with the pre-race favourite now out of the field.
FitzRandolph won in a two-run time of 69.23 seconds, a new Olympic record over both runs, to become America's first 500m champion since Eric Heiden in 1980.
"I couldn't have written a better script," said the 27-year-old. "In 1980 when I started skating Eric Heiden won his five gold medals.
"It's a dream come true, a gold medal come true. It wasn't the best race, but I was good enough to win," said FitzRandolph who slipped at the final turn.
"I feel like I had some help from upstairs."
Reigning Olympic champion Hiroyasu Shimizu of Japan took the silver and Kip Carpenter of the US claimed bronze.
World record holder Shimizu, a fast starter skating almost in a crouch, beat FitzRandolph on his second run, timing 34.65, but could not repeat his success of Nagano overall.
"I really could have done better. I feel a bit of regret," Shimizu said. "The difference might have been minute but it was the difference between winning and finishing second."
For Carpenter though bronze was greater reward than he could have expected.
The 22-year-old, ranked 27th in the world last season, came from nowhere for his medal.
"I have been waiting for this for my entire life. It is the best experience of my life," he said.