Ukraine's Serhiy Kulish took silver and India's Swapnil Kusale earned bronze.
Norway's Jon-Hermann Hegg set the early pace and led the eight-man field after the kneeling and prone segments but faded away to finish fifth.
World record holder Liu won with a total of 463.6, while Kulish aggregated 461.3.
Kusale's (451.4) bronze was India's third medal, all in shooting, at the Paris Games.
"I'm very lucky because the Olympics happened at a time when I'm in a good stage (of my career)," said Liu.
"Today, I did not perform as well as I did in the World Cup. I feel like my overall control is good and my mentality is good."
Norway's Jon-Hermann Hegg set the early pace and led the eight-man field after the kneeling and prone segments but faded away to finish fifth.
With three shots to go in the standing elimination section, Liu trailed Kulish by 0.3 before outscoring his opponent in each of the remaining shots to run away with the gold.
Liu said his dream Olympic debut was a collective effort by his team but when asked if he considered himself a genius, the shooter paused before answering: "Probably I am."
It was China's fourth gold medal in shooting in Paris.
Despite his late wobble, Kulish savoured his silver and was aware what it meant for his war-ravaged country.
"I am overwhelmed with emotion. It is hard to describe," said the 31-year-old, who won the 10m rifle silver in the 2016 Rio Games.
"This medal means a lot. It is not a gold, but I am pleased I got a medal. To get an Olympic medal is a dream."
"It’s always hard to prepare for any Olympics cycle because it takes two years before the event, and it’s always difficult and challenging... I am happy with what I’ve achieved."
Swapnil Kusale's (451.4) bronze was India's third medal, all in shooting, at the Paris Games.