He swam yet another world record, shaving 0.57 seconds off the mark he set at the US trials in July this year.
Phelps was never in trouble and led comfortably throughout, touching the wall in 1:54.23.
The field stayed with Phelps during the Backstroke and Butterfly legs but the defending Olympic champion took the lead during the Breaststroke leg and pulled away in the final 50 meters of Freestyle.
Phelps has dominated every event he has entered, including the 400m Individual Medley.
Hungarian Laszlo Cseh put in another great performance, again edging out Phelps` teammate Ryan Lochte to win the silver medal in a European record time of 1:56.52.
Cseh now has a pair of silver medals from the Individual Medley events after finishing second to Phelps in Sunday`s Men`s 400m Individual Medley.
With only 10 minutes to recover after winning the gold in the 200m Backstroke, Lochte could only manage the bronze medal in a time of 1:56.53, just one hundredth of a second behind Cseh.
Lochte now has a pair of bronze medals in the Individual Medley events after finishing third in Sunday`s 400m Individual Medley.