Storey, who did not compete in track cycling events in Paris to focus on the road events, adds race gold to the time trial title she won in Clichy-sous-Bois on Wednesday.
She formed part of the leading pack throughout the course, alongside 19-year-old Gaugain and Colombian rider Paula Ossa Veloza, who would eventually claim bronze.
But on the final circuit of the five-lap course, Storey and Gaugain broke away – with the experienced rider eventually winning out.
And afterwards Storey said she used Gaugain’s own tactics against her to gain the upper hand by the narrowest of margins.
“The lap before the end, her coach shouted ‘next lap on the left’. So I had a look where we were to make sure I was ready for that,” she said. “He shouted ‘go’, so I went too.
“Heidi took a bit of a gap [lead] but that was fine, I had speed. It was just a matter of holding her while she accelerated from a long way out, it was the only tactic she could use because I have the faster sprint.
“Then on the final corner, that’s when I unleashed it. She tried to come again, but I threw my bike and it was mine.”
This was by far the closest finish Storey has had in the Paralympic road race – she won by more than seven minutes in 2012 and more than three minutes in 2016.
It was a seven-second margin of victory three years ago in Tokyo, but here there were barely inches between her and second place.
But it reaffirms Storey’s status as Britain’s most successful Paralympian ever, and as one of the most decorated active Para-athletes.
She will be 50 by the next Paralympics, in 2028 in Los Angeles, but Storey has refused to rule out another golden tilt and a 10th Games.
“My glutes are on fire, I was creaking before the race, but that’s normal,” she said. “It’s about finding ways to manage the process and privilege of getting older as an athlete. I never envisioned eight Games, let alone nine.
“The key is not to be afraid to lose a race, I have to trust myself and go on instinct. I just wanted to see what I had to respond. I keep finding ways to win, long may that continue.”
On LA, she said: “I need to enjoy this one first, but never say never to anything. This just needs to sink in, it’s one of the best races we have had.”
Storey’s performance was a standout on an otherwise disappointing morning in the road race events for GB.
In the men’s C4-5, both Blaine Hunt and Archie Atkinson failed to finish the race. Hunt, a sprint specialist, pulled out after one lap of the seven-lap, 99.4km event having supported Atkinson through the start.
However Atkinson, who suffered a major crash during the final of his track event last week, struggled throughout and pulled out at about the halfway point of the race.
Earlier, Stephen Bate was forced to withdraw from this afternoon’s B road race as his pilot, Chris Latham, is unwell.
This afternoon, Lora Fachie, Lizzi Jordan and Sophie Unwin will compete for GB in the women’s B road race.
