Massive favourites ahead of the Games, the Netherlands trio of Roy van den Berg, Harrie Lavreysen and Jeffrey Hoogland put on a sprinting masterclass to roar to gold.
Britain were trying to stop the so-called "Bullet Train" in the final but did not stand a chance as they came in almost one second behind in a race often won by the width of a wheel.
Australia beat France to take the bronze - their first medal in the men's team sprint since 2000.
"It's crazy," Lavreysen, who is seeking to surpass his two gold medals from the Tokyo Games, told reporters.
"Of course we were going for the gold medal tonight but breaking world records and going so quick was really special."
The Dutch team sent out a statement in the first round when they clocked 41.191 seconds to lower their own world record.
That was just the warm-up though in a sweltering velodrome as they turned the final into a procession against a British trio coached by track sprint great Jason Kenny.
Lavreysen, nicknamed "The Beast" because of his phenomenal power, led out the second lap of the 250 metre track and the experienced Hoogland did the rest.
The 27-year-old Lavreysen, a 13-time world champion, will next try to defend his sprint title and then will go in the keirin, the only discipline he did not win in Tokyo.
Asked whether he feels unbeatable, Lavreysen smiled. "Well, it feels nice going in to this week.
"Let's go for it (three golds). I feel good, I broke my PB on my lap and really looking forward to the sprint."
For Britain's Jack Carlin, who was joined by Ed Lowe and Hamish Turnbull, it was yet another near miss and he must be sick of the sight of the orange-clad Dutch sprinters.
He now has 14 Olympic, world or European medals - but none of them gold.
"Look at the world record. The Dutch are a great team, they are three great individuals. We executed what we knew we could do. We went to that final and enjoyed it," he said.
It was another fast and furious day in the velodrome with more world records falling after day one when the British women's team sprint squad lowered the mark en route to gold.
Australia's men broke the team pursuit world record as they topped the time charts in the first round.
The quartet of Oliver Bleddyn, Sam Welsford, Conor Leahy and Kelland O'Brien clocked 3:40.730 and will ride against Britain for gold in Wednesday's final.
"It was pretty special to go to 40, I think we knew we were going to be quick but we didn't realise we were going that quick," Welsford, whose quartet destroyed reigning champions Italy, told reporters.
Italy and Denmark will contest the bronze.
New Zealand's were quickest in the women's team pursuit qualifying rounds as they almost broke the world record.
The quarter of Ally Wollaston, Bryony Botha, Emily Shearman, Nicole Shields completed 16 laps of the 250 metre track in 4:04.679 with the United States second in 4:05.238.
