Boston's Jaylen Brown added 36 points off the bench and Indiana's Tyrese Haliburton had 32 to help spark the East past the old All-Star Game one-team record of 196 set by the West in 2016.
"Once we came out in the third and we made a lot of shots, it was like what's the record," Lillard said. "We found out and we went after it."
Milwaukee guard Lillard, who sank a pair of half-court shots, made a game-high 11 3-pointers off 23 attempts and went 14-of-26 overall to earn the game's Most Valuable Player award.
"It's an honor," the eight-time NBA All-Star said. "I've been here a few times so to be able to have this kind of accomplishment is special."
East captain Giannis Antetokounmpo, the 2021 All-Star Game MVP who had 23 points, knew his Bucks teammate Lillard was set for a big night.
"I knew he was going for it," said Antetokounmpo. "When he has that twitch in his eye, when he's locked in, you've got to pass him the ball and just get out of his way."
It was a night of spectacular slam dunks, astounding passes and amazing shotmaking by elite players from around the world in a relaxed atmosphere, delighting a sellout crowd at Indianapolis.
"Everybody played hard. We had fun," Antetokounmpo said. "The ball was moving. We made a lot of threes. We scored a lot of points. I'm happy."
Minnesota's Karl-Anthony Towns came off the West bench to score a game-high 50 points, 31 of them in the fourth quarter, while Oklahoma City's Shai Gilgeous-Alexander added 31 in a losing cause.
The 397 combined points shattered the old mark by 23. The East shot 83 of 146 (56.8%) from the floor and made a record 42 3-pointers, six over the old mark by Team LeBron in 2019, in 97 attempts (43.3%).
Lillard hit a jaw-dropping mid-court shot with 6:54 remaining in the third quarter and the East closed the period on a 16-4 run to seize a 160-136 advantage entering the fourth.
Haliburton, who made 10 3-pointers in 14 attempts and shot 11-of-15 overall, sank a 3-pointer to lift the East to the milestone 200 points with 87 seconds to play.
A 13-0 East run brought a 70-51 lead early in the second quarter on the way to a 104-89 half-time edge.
The East took a 53-47 lead after the first quarter as Haliburton scored 15 points on five 3-pointers in a 92-second span, putting the East ahead 20-14.
Los Angeles Lakers superstar LeBron James, a four-time NBA champion and four-time NBA Most Valuable Player, was selected to a record 20th All-Star appearance at age 39.
But he was hampered by a left ankle injury and scored only eight points in 14 minutes and did not play in the second half.
Reigning NBA MVP Joel Embiid of Philadelphia and New York's Julius Randle were out for the East with injuries, replaced by Atlanta's Trae Young and Toronto's Scottie Barnes.
