After turning seventh after the opening butterfly leg and sixth following the backstroke, Tranter stormed to the lead as he dominated the third breaststroke leg.
The 22-year-old built his lead in the final freestyle leg to claim gold in 1:57.83 ahead of Scotland's Daniel Wallace (1:58.72) and South Africa's Chad le Clos (1:58.85).
"The breaststroke leg's always been a strong point of my medley," Tranter told ABC Grandstand.
"I've always had quite a natural and powerful breaststroke stroke, even under fatigue like you find in a 200 medley.
"I've got a decent 200 breaststroke as well ... and it just so happens in the medley that the breaststroke tends to be the make-or-break leg.
"I'm quite lucky that my natural leg is the make or break."
Tranter's gold contributed to Australia's growing medal haul (34 gold, 101 medals) that is the largest in the Commonwealth Games ahead of England (33 gold, 93 medals).
Cate Campbell contined her extraordinary Games as she anchored the women's 4x100 medley to gold - even after turning half-a-body length behind England's Francesca Halsall.
The team featured Emily Seebohm (backstroke), Lorna Tonks (breaststroke) and Emma McKeon (butterfly) before Campbell (freestyle) powered home in the final leg.
There was more shooting gold for Australia with Adam Vella winning the men's single trap and and David Chapman triumphed in the men's 25m rapid fire pistol.
Jamaica claimed another three athletics golds as they continued their hot form at the track.
Andrew Riley won the 110-metre hurdles final at Hampden Park as England's William Sharman had to settle for silver and Shane Brathwaite of Barbados took bronze.
Riley had clocked the fastest qualifying time and there was no catching the 25-year-old again when it mattered most as he won in 13.32 seconds.
There was no Andy Turner to defend his title in the final as the Englishman crashed out of his heat, hitting the first hurdle and colliding with the second before pulling up.
Stephanie McPherson also struck gold for in the 400m in a time of 50.67secs as Jamaica took a claim sweep of the medals, with Novlene Williams-Mills and Christine Day filling the podium with silver and bronze respectively.
Kimberly Williams also added to Jamaica's tally of golds as she won the long jump by leaping 14.21 metres, which was a season's best.
There were two gold medals for Kenya on the track courtesy of Joyce Chepkirui's triumph in the 10,000m, with compatriots Florence Kiplagat and Emily Chebet ensuring a clean sweep of medals for Kenya.
Faith Chepngetich Kipyegon then won the 1500m final ahead of England's Laura Weightman and Kate van Buskirk of Canada, while Jim Steacy won gold in the men's hammer throw final.
Benjamin Proud claimed England's other gold medal in the pool on Tuesday, that coming in the 50m freestyle and Ryan Cochrone claimed his second gold of the Games by winning the 1500m freestyle final for Canada.
Lauren Boyle and Sophie Pascoe claimed golds for New Zealand in the 400m freestyle and the 200m individual medley SM10, while Wales' Georgia Davies claimed gold in the 50m backstroke having also won silver in the 100m backstroke.
The first gold medal of Tuesday went to Canada's Catharine Pendrel as she claimed victory in the woman's cross-country mountain biking event.
Pendrel finished over a minute clear of team-mate Emily Batty, with Australia's Rebecca Henderson claiming bronze.
England claimed gold in the men's team gymnastics, despite an injury to Sam Oldham, and England's women also achieved the feat.
Daniel Rivers won the rifle 3 positions final for England with a score of 452.9 and Jasmine Ser claimed gold for Singapore in the women's event.
India claimed three wrestling golds as Amit Amit Kumar beat Ebikweminomo in the men's FS 57kg decider, Sushil Kumar beat Pakistan's Qamar Abbas in the men's FS 74kg showdown and Vinesh won her dual with Yana Rattigan of England in the FS 48kg.
There was also a wrestling gold medal for Canada's Korey Jarvis in the men's FS 125kg at the expense of Rajeev Tomar.
Papua New Guinea also struck gold on Tuesday thanks to Steven Kukuna Kari's victory in the 94kg Group A weightlifting contest, with the other weightlifting gold of the day going to Canada's Marie-Eve Beauchemin-Nadeau in the 75kg Group A competition.