Although Sweden were only able to finish fifth, Sjöström became the first woman to swim under 52 seconds as she led out the Swedish team, beating the previous record of 52.06secs set by Australia's Cate Campbell in 2016.
It was the only world record to fall on the opening day of the championships in Budapest.
While Katie Ledecky helped steer the USA to victory in the relay, with Australia finishing second and the Netherlands third, Sjöström made history in her stunning opening leg.
"The plan was to go for the world record on the first day, because I know I'm going to be more fresh then than maybe later this week," explained the 23-year-old.
"It's also much easier to go for records in the first leg of the relay, so I kind of took the chance. I went all out for the first 50, and hoped for the best on the last 50. It wasn't really smart swimming, I was just chancing it."
"It's not the prefect planned race, like when I will swim the individual races later this week. I have to be more careful then on the first 50 so I can finish," she added with a grin.
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Sjöström came into Budapest on the back of a season which had already seen her go close to the world records in both the 50m and 100m freestyles.
Her world record time now makes her the favourite for gold in the 100m freestyle final on Friday. She is also the fastest into Monday's 100m butterfly final from Sunday's semis.
The Swedish sprint ace could also take gold in the 50m butterfly and the 50m freestyle later in the week.