Richardson, who won three medals for Australia at the Paris Olympics, recorded a time of 8.941 seconds at the Konya Velodrome in Turkey on Thursday.
The time shaved more than a tenth of a second off the previous mark of 9.088 set by Dutch Olympic champion Harrie Lavreysen at the Paris Games last year.
"It's cool to be able to call myself the fastest cyclist of all-time," Richardson said in a British Cycling statement.
"It was a lot faster than I've previously ridden. I was basically just a passenger. I gave the bike a bit of direction and it was just steering itself almost."
Richardson's change of allegiance straight after the Olympics took Australia by surprise and generated some criticism from elite former cyclists.
Richardson brushed off the criticism, saying he made a "good return" on the investment Australia's elite cycling programme had put into him.