South Korea dominated the women's event claiming the gold and silver through Oh Ye Jin and Kim Ye-ji respectively.
Manu Bhaker's bronze is India's first medal in the Paris Games.
After China won the 10-metre air rifle mixed team event on Saturday, Xie (240.9) mined another gold from the Chateauroux Shooting Centre, beating Italian Federico Nilo Maldini (240) who took the silver medal.
Paolo Monna (218.6) claimed bronze with clear daylight between the top three and rest of the field.
"If I hadn't won, this may have been my biggest regret," Xie told reporters.
"It is very difficult to be selected for China for the Olympics, so to be able to stand here today, on this higher stage, is very significant for me."
Xie carried a wafer-thin cushion of 0.4 going into the final shot after Maldini had reduced the gap in the elimination section.
The Italian lost his momentum at the last minute, however, and stood gazing at the floor after signing off with a modest 9.5.
Xie scored 10 to seal the gold and flashed a shy smile as his teammates in bright red-and-white erupted in the stands.
"We both made some silly mistakes but we have no regrets whatsoever," Maldini said, referring to compatriot Monna.
"I had good vibes since the beginning of the final," Monna said. "It's certainly emotional and a very rare one because we are friends.
"This is the first time we're on the podium together and it is the most important one."
