Lagat finished second after Dejen Gebremeskel of Ethiopia pulled away with 300 meters left. Gebremeskel won his fourth straight Carlsbad 5000 in 13:13.
Lagat's time originally was announced as 13:18. Race officials later said that the official USA Track & Field timers had Lagat's time as 13:18.44, which rounds up to 13:19, which will be the time submitted for record ratification.
Lagat broke Mark Davis' mark of 13:24, set in the Carlsbad 5000 in 1996.
Lagat, a four-time Olympian and holder of five American middle-distance records, was competing in is his first 5K road race.
"Today was special," said Lagat, 39. "I look forward to coming back."
Lagat and Gebremeskel battled three weeks ago in the IAAF World Indoor Championships 3,000 meters in Poland. Lagat earned the silver, while Gebremeskel took the bronze.
"He wasn't going lose to me again," Lagat said about Gebremeskel's late push which kept Lagat from being the first American to win the Carlsbad 5000 since Doug Padilla in 1990. "So he ran as hard as he could."
The two were in the lead pack for most of the race until Gebremeskel found another gear to become the event's lone four-time winner.
"It's a unique course; it's not easy," said Lagat, a Kenyan native who became a naturalized American citizen in 2004.
Lagat said Gebremeskel had the advantage from running Carlsbad before.
"It's not that easy, even though it looks flat. I went in with the mindset to have fun, stay relaxed as much as possible. Dejen was right there pushing the first mile, and at halfway I couldn't even see him, but he was right behind us. He was basically taking a breather at the back. He was waiting. And when he took the turn, he just unleashed it, so experience matters a lot on this course."
Lagat couldn't be too disappointed about finishing second since he got his first American road record.
"I won't really cry too much about it," Lagat said. "Dejen is a great runner. Twenty one days ago, I beat him in the 3,000m in Sopot and I knew he wasn't going to rest until he beat me in this race. He's a strong runner. And, well, I got the record. That's another consolation. If I had won today, it'd be great. If I won and got the record, that would be a double win for me. But I did not do that, I got second, people celebrated, I was happy with it.
"I'm glad it went the way it did because I'm going to be hungry for even more next year and the year after that."
Davis was at the race to see his record tumble.
"I think Bernard is an awesome athlete and he deserves all the accolades he can get," Davis said. "I've had the record long enough."