The 30-year-old Kenyan knocked 26 seconds off the record of 2:03:23 set by compatriot Wilson Kipsang in Berlin last year to become the first man to complete a marathon in under two hours, three minutes.
Another Kenyan, Emmanuel Mutai, was also faster than the previous best, finishing second in 2:03:13.
Mutai had run the fastest marathon in history in 2:03:02 in Boston in 2011, though it didn't count as a world record because the course is considered too straight and downhill.
Abera Kuma of Ethiopia was third in 2:05:56.
Tirfi Tsegaye won the women's race in 2:20:18, with fellow Ethiopian Feyse Tadese second with 2.20.27.
American Shalane Flanagan was third in 2:21:14, missing out on her bid to beat the U.S. record of 2:19:36.
Some 40,004 runners from 130 nations were accepted for the race, which was run in perfect clear conditions.
Kimetto, whose previous personal best was the 2:03:45 he ran to win the Chicago Marathon last year, was part of a leading group including Mutai, Kuma, Tsegaye Kebede, Eliud Kiptanui, Geoffrey Kamworor, Levy Matebo and Franklin Chepkwony.
http://abcnews.go.com/Sports/wireStory/dennis-kimetto-sets-world-mark-berlin-marathon-25814155