Pendleton suffered track burns after a crash in her first best-of-three semi-final heat against arch-rival Meares.
The Briton struck back to reach the final in Melbourne, where officials relegated Lithuania’s Simona Krupeckaite to hand her gold.
“It’s been an emotional rollercoaster,” Pendleton said.
“That’s not necessarily the way I’d like to win, in an ideal scenario, with relegations and stuff. It always feels a bit weird and not very true to the sport, but those are the rules.
“I’m delighted with the result. I didn’t think it was going to happen coming into today. It’s great to end on a high.”
Pendleton intends to retire after the London Olympics and will now do so with nine career world titles to her name, including six in the sprint.
To keep her hopes of winning this one alive, she first had to peel her battered right side up from the Hisense Arena track. She clashed arms with Meares in the midst of a frantic finish to their first semi-final heat, sending the 31-year-old crashing down and burning her right shoulder, elbow and hip on the wooden surface.
“It’s not too bad. I lost my balance, went too far in one direction and lost my traction,” she said.
“My dad always said you don’t do track cycling unless you’re prepared to crash. I slid quite nicely, which sounds random, and I felt fine. I could tell it was just surface wounds.”
Meares added: “I’m getting sick of meeting Vicky in the semi-final, it’s making it really hard. For her to pick herself up after that heavy fall and come back as hard as she did is a mark of the woman and the great champion that she is.”
Olympic champion Pendleton against world champion Meares is the London 2012 sprint final to which track cycling fans and the media have been eagerly building ever since Beijing 2008, where they finished first and second respectively. — BBCSport