Running the race of her life, the 26-year-old athlete from Pretoria held a narrow lead off the top bend and tore away from a world-class field in the finishing straight to win comfortably in 54.37 seconds.
Nel smashed her previous career record of 54.82, set in Marrakech in June last year, by nearly half a second.
Two-time US champion Tiffany Williams was left stranded by the in-form South African, crossing the line in 55.22 for second place.
Another American, Olympic silver medallist and former world champion Lashinda Demus, was well behind in third position, clocking 55.86.
Khotso Mokoena, the only other SA athlete competing at the World Challenge event, took second place in the men’s triple jump with a best leap of 16.67m.
He was just three centimetres short of the winning distance achieved by former World Championships bronze medallist Alexis Copello of Cuba.