Zhang won the title by beating world No. 1 and her teammate Xie Xingfang 21-12, 10-21, 21-18.
"I have never stopped dreaming of standing on the medals podium," Zhang said after the match.
It is a duel of will and courage instead of skills as both were on the verge of exhaustion following days of fierce fights against the world's top players.
Zhang intensified attacks while Xie made wrong judgments after the two reached 5-5 in the first game, ending the first game 21-12. Xie revenged in the second game and achieved a good start at 5-0. She had since taking the lead until the game ended.
In the decisive game, both used rackets to support their bodies amid intervals of the competition, which was a sign of limits of physical energy. They were 16-16 at one time, but Zhang was more persistent afterwards.
Zhang burst into tears as the last returning shuttlecock from Xie touched the net and fell to the ground of Xie's half.
"I thought once that I might not make it when Xie was keeping up with me in the third game. I was so tired," said Zhang. She said earlier that she wanted to have a second Olympic gold. "So I can have some sweet memories for myself."
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Xie said it was acceptable either of them winning the gold, but admitted she was disappointed over the defeat because she was unlikely to play in the London Olympic Games.
"Zhang and Xie presented the world a most wonderful match," said Li Yongbo, head coach of the Chinese national badminton team.
Zhang put her gold medal on the neck of coach Lee Yongbo when they took a souvenir photo. She said "I could have chosen to retire if without the support from my coach."
"It is really a miracle for Zhang Ning to retain the Olympic gold. Her entrance to the Beijing Olympic Games was even in doubt two months ago," Li said. "Maybe this is the beauty of Olympiad."
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