The Olympic champion beat team-mate Phelps by 0.2 seconds to win the USA's 12th gold in the pool, with two days of competition still to come.

Malchow won in a championship-record time of one minute 55.21 seconds, only 0.63 secs outside Phelps' world best that he set at last year's world championships.

Phelps had been just off world record pace at the halfway stage, but could not hold on and came home in 1:55.41, with Japan's Takashi Yamamoto third.

Malchow dislocated his left knee in a bizarre training mishap on the eve of the Yokohama meet and was taken to hospital.

"I was a little worried to say the least," said Malchow. "I've had a fairly injury-free career and to have a problem like that before a big international competition had me a little scared.

"Mike and I have been going back and forth for a while now and it's nice to get a big one over him at an international meet."

In other finals, Jenny Thompson rolled back the years to win the 50m freestyle.

The 29-year-old only returned to competitive swimming in June following an extended break after winning three gold medals at the 2000 Sydney Olympics.

But now she has her sights on next year's world championships in Barcelona after clocking a personal best 25.13 secs to beat Australian Jodie Henry and team-mate Tammie Stone.

"It was a real buzz," Thompson said. "I haven't felt like that about a race since I broke the 100 butterfly world record (in 1999)."

Thompson also took bronze in the final of the 100m butterfly on Sunday behind US team-mate Natalie Coughlin and Australia's Petria Thomas.

"I only had nine weeks to train this summer, so I felt fast and zippy and that's how you should feel for the 50," she added.

"I have never really enjoyed the 50. My focus has always been on the 100m but I'm absolutely elated to get my best time ever tonight."

Lindsay Benko completed her fightback from a serious knee injury with victory in the 400m freestyle, and Brendan Hansen won the men's 200m breaststroke.

Australia picked up two gold medals through world champion Thomas in the 200m butterfly and the 4x200m freestyle relay, who were led home by Ian Thorpe.