Kerr hit the front at the bell and clocked 7min 35.56sec for victory in a tactical race, 0.14sec ahead of US rival Cole Hocker.
France's Yann Schrub claimed bronze.
"It's nice to be back to where I was," said Kerr, who won the world indoor title two years ago but sustained a calf tear at last year's 1,500m final at the world outdoors in Tokyo.
"This race didn't go the way I wanted it to go, but racing is all about dealing with the situations you are put in.
"I shouldn't worry much about the mistakes in the race, although there were a lot of them today. I didn't have time to think about them; I had to push.
"I wanted this gold medal so badly. I had all kind of scenarios in my head, and I am just pleased it all went in my favour today."
The 15-lap race had been heralded as one of the stand-out events at the world indoors.
The 15-strong field featured the full men's 1,500m podium from the 2024 Olympics, along with the world 3,000m steeplechase champion, New Zealand's Geordie Beamish, in a stacked clash of medallists.
Hocker, who already has Olympic 1,500m and world 5,000m titles to his name, was targeting his first world indoor title after 1,500m silver in 2024, while 2023 world 1,500m champion Kerr was eyeing a second world indoor title two years on from his victory in Glasgow.
Also in the running was the USA's Olympic 1,500m bronze medallist Yared Nuguse, who got 3,000m silver behind Kerr two years ago.