The 29-year-old took more than a tenth of a second off a record that had stood for 16 years, clocking 52.20 seconds to beat Russian Yuliya Pechonkina's previous mark of 52.34.
"I'm just shocked," said Muhammad.
"I've been kind of hitting that time in practice and my coach was like 'there's no way you can't do it'."
Nineteen-year-old Sydney McLaughlin was second in 52.88 and Ashley Spencer third in 53.11. All three qualified for the World Championships in Doha in September, where they will be joined by reigning world champion Kori Carter in a formidable US quartet.
And Muhammad predicted her new record would not last nearly as long as the previous one.
"That 52 is going to get broke - if not by me, by the other women," Muhammad added.
Noah Lyles ran 19.78 seconds to win the men's 200m, with 100m champion Christian Coleman second in 20.02 as both qualified for the World Championships.