Teodor Peterson of Sweden took silver and another Swede, Emil Joensson, came through to claim the bronze after a tricky right-hand bend on a descent sent three skiers tumbling.
"The Russians were extremely strong today," Hattestad, who clocked the best qualifying time and won his quarter and semi-final runs, told reporters
"I also wanted to win a medal and I'm happy that it's gold. I couldn't imagine during the race that I would be Olympic champion."
Joensson, Norwegian Anders Gloeersen and Russian Sergey Ustiugov all fell and although the host nation athlete was quickest to get back on his skis, he realised he had broken a ski pole and had to settle for fifth.
Marcus Hellner, another Swede, was never in contention and was already way behind when the crash happened and Norwegian Petter Northug's miserable Olympics continued when he was eliminated in the semi-finals.
"It's not my day. I felt too heavy in the last climb," Northug, who was far from his best on Sunday and never appeared at ease on Tuesday, told reporters.
Several other top contenders, including 2010 sprint champion Nikita Kriukov of Russia, were eliminated before the final.
"I touched my opponent a bit and I lost my position," Kriukov told reporters.
"I now have to prepare for the team sprint. It's a bad result. If you take part in the Olympics, it's to win or at least be on the podium."
Swiss Dario Cologna, winner of Sunday's skiathlon, fell in his quarter-final and was eliminated and Italian Federico Pellegrino, second in the sprint World Cup rankings, was knocked out in the semis.
"Of course, I'm disappointed. I wanted to have a good result but the crash prevented me from getting that," Cologna said.
"Of course, it's warm and the snow is deep but it's normal. The conditions are the same for everyone. There were many falls today, I'm not the only one."
Conditions were tough, with many skiers in both the men's and women's qualifiers falling due to melting snow in mild weather.
"The conditions were not the same .... two days ago," Swiss Jovian Hediger, who missed the cut in qualification, told reporters.
"The snow was so deep and so soft, it was really hard to race today."
Briton Callum Smith, who also failed to qualify, told reporters: "I saw some nasty falls, I nearly had a tumble myself. The snow was very soft, it's easy to lose your track.
"It's always going to be soft (in this weather) but I think they did a pretty good job in preparation."