Cain, America's brightest middle distance running hope at age 17, pulled away down the final straight to win in two minutes, 35.80 seconds. That clipped more than three seconds off her previous junior record of 2:39.25 set last year.
"I kind of felt the last 150 (metres) I can do more," Cain, who missed the national record by about a second, told reporters.
Rupp, already the year's fastest man at 3,000 and 5,000 metres indoor, dropped out of what he had hoped would be a fast mile with about three laps to go.
The Olympic 10,000 metres silver medallist said a sore left leg prompted the decision.
"I just didn't feel it was worth risking it in the race today," Rupp told meeting organizers.
His coach, Alberto Salazar, later texted the Oregonian newspaper that Rupp, who hopes to compete in the U.S. world indoor championship trials later this month, was "doing good. Doing a great (postmeet) workout."
New Zealand's Nick Willis went on to win the race in 3:57.41.
Ethiopian world 5,000 metres silver medallist Hagos Gebrhiwet won the men's 3,000, taking the world lead from Rupp with his time of 7:34.13. Compatriot Dejen Gebremeskel, the Olympic 5,000 silver medallist, was a close second in 7:34.70.
U.S. world indoor record holder Jenn Suhr easily claimed the women's pole vault with a clearance of 4.70m as she continued her preparations for next month's world indoor championships in Poland.
Kenya's Sally Kipyego won the women's two-mile in 9:21.04 that left American Jenny Simpson heartbroken.
Simpson, a former world 1,500m champion, stopped running after she had sprinted past Kipyego on what she thought was the final lap. But a full lap remained and Simpson could never catch up with the Kenyan.
American Joe Kovacs surprised countrymen Ryan Whiting and Cory Martin and Polish Olympic champion Tomasz Majewski to claim top honours in the shot put. Kovacs's best throw sailed 21.35 metres with 2012 world indoor gold medallist Whiting (21.18), Martin (20.63) and Majewski (20.61) trailing.
An American all-star team shattered the world best in the infrequently run indoor 4x800 metres relay with Erik Sowinski bringing the foursome home in 7:13.11.