The older Brownlee brother cruised away from Spain's Javier Gomez on the final of the event's three disciplines to take a comfortable victory in Hyde Park.
Jonny was also present in the elite leading group heading into the run but slipped back before being forced to take a 15-second penalty for getting on his bike too early.
Richard Varga led out the swim in the Serpentine with the Brownlees, who have been training alongside the Slovakian, in close attendance.
They came out of the water in fourth and sixth but it was two-time world champion Gomez who shot off on the bike and a group of five, including both of the brothers, quickly formed.
The third member of the British team, Stuart Hayes, had a good swim, coming out of the water in eighth, but he was not able to make the break and ended up in the second group.
There was heartbreak for Canada's flag-bearer Simon Whitfield, the Olympic champion in Sydney and the silver medallist in Beijing, as he crashed very early on the first lap and was forced to pull out.
By the end of the first lap the front group had a lead of 20 seconds but that gradually came down and on the third lap they were caught.
That allowed Hayes to move to the front and take up his job as a helper for the Brownlees, but Jonny's hopes of a medal were hit when it was confirmed he would need to serve a 15-second penalty.
Alistair tried to jump away on the sixth lap but Jonny did not go with him and he was quickly reeled back in.
The pair were second and third into transition and immediately headed out at the front of the run, but Gomez went with them.
The Spaniard, a world champion in 2008 and 2010, missed out on a medal in Beijing in a race he went into as the big favourite and seemed determined to make amends.
By the end of the first lap, the trio already had a 17-second advantage over the rest, but at the start of the third lap it was Jonny who could no longer handle the pace and he slipped back.
And shortly afterwards the gap began to open between Alistair and Gomez, the Spaniard no longer able to live with the Yorkshireman's incredible speed.
Jonny took his penalty on the third lap and came out still in third place, with French duo David Hauss and Laurent Vidal still some way behind.
Alistair gradually extended his gap and had time to collect a Union Flag before walking across the finish line, with Jonny finishing well clear in third but some way behind Gomez.