Short, who also won the 800m freestyle on the opening night of the meet on Wednesday, led from the start at the William Woollett Aquatics Center in California and clocked 3:40.52 to finish ahead of China's Zhang Zhanshuo (3:42.42) and American Aaron Shackell (3:43.44).
His time eclipsed Ian Thorpe's championship record of 3:41.83, set in Sydney in 1999, and also bettered the U.S. Open record of 3:43.33 set by Rex Maurer in 2025.
"I thought I was going 3:39. I had so much left for the end, but personal best — can't complain and to beat Thorpe's record ... It's about time it went," Short said.
"He's one of my heroes growing up. I've watched every single one of his races."
The victory followed Short's 400m freestyle title at last month's Commonwealth Games.
In the women's 400m freestyle, Pallister held off American Katie Ledecky to secure her gold medal after clocking 3:58.42.
Ledecky took silver in 4:00.15, while New Zealand's Erika Fairweather claimed bronze in 4:02.35.
The 24-year-old Pallister, who won four gold medals and a silver at the Commonwealth Games, built a lead of more than two seconds by halfway and resisted a late charge from Ledecky to post a personal best.
"I did the first 50 and after having two really good 200s at the start of the week, I knew I had easy speed. And I think it got me on the back end," Pallister said.
World record holder Summer McIntosh missed the championship final after failing to advance from the heats.
Elsewhere, American Gretchen Walsh won the women's 100m butterfly in a championship-record 55.15 seconds.
Canada's Taylor Ruck took silver in 56.71, and Australian Alex Perkins claimed bronze in 56.75. Australia's Matthew Temple also set a championship record of 50.39 seconds to win the men's 100m butterfly.
