The six-year-old, ridden by Nico de Boinville, lived up to his billing as a potential great of national hunt racing, by leaving a high-quality field scrapping for second.
De Boinville has now won all of Cheltenham's big three having ridden Coneygree to the Gold Cup in 2015 and winning the Queen Mother Champion Chase three times.
"It's been a big ambition of mine to win the Big Three, but it is all about the horse today," he told BBC radio.
"To ride a horse like this is what every jockey wants."
His victory, by a huge nine lengths, was a record-extending ninth Champion Hurdle victory for trainer Nicky Henderson.
Irish Champion Hurdle winner State Man was second past the post with 66-1 shot Zanahiyr third.
The opening day of the festival, which is predicted to attract 274,000 fans across the four days, also featured a fairytale end to the career of Honeysuckle in the Mares' Hurdle.
With Rachael Blackmore, who rode her to consecutive Champion Hurdle victories in 2021 and 2022, in the saddle, the Henry de Bromhead-trained horse trailed Love Envoi over the final hurdle but powered home in the closing stages to massive cheers.
Afterwards, Ireland's Blackmore paid an emotional tribute to De Bromhead's 13-year-old son Jack who died falling from a horse at a beach race in Kerry last year.
"We all wish a very special kid was here but he'll be looking down on us," she said.
On Honeysuckle's career, she said: "She's a phenomenal mare who has been amazing for my career. She's a credit to everyone."
It was Honeysuckle's 17th win from 19 races.
