Mulder, 27, won with a combined time from his two races of 69.31 seconds, beating compatriot Jan Smeekens by just 0.01 second in a thrilling climax to the competition. Meanwhile, Ronald Mulder, the twin brother of Michel, took bronze in a time of 69.46 seconds.
Smeekens led the eventual winner by 0.04 sec after the first race, and with Michel Mulder only racing in the 19th pair, the stage was set for a nail-biting finale.
He crossed the line with his head in his hands and it took several seconds for him to register that he had won the Olympic title. Then, when the final result flashed up he let out a roar of triumph and pulled his orange skating suit open.
“When I crossed the line I just didn't know. Then I saw that I had won and I couldn't believe it,” explained the new Olympic champion.
“Now I have won everything there is to win. After all this work, I'm the Olympic champion, I can't believe it.”
It was the second speed skating clean sweep for the Netherlands at the Adler Arena in three days of competition after the country's men took all three medals in the 5,000m on Saturday.
Surprisingly, though, it was the first ever 500m Olympic title for a country that has long been one of the world’s speed skating powerhouses.
Silver medallist Smeekens was philosophical about coming second: “At first I had mixed feelings because it was so close. I looked at the scoreboard and I thought that I'd won, and seconds later I saw I didn't.
“But now I have to be happy with my second place. It was a very stressful day, and now I've won an Olympic medal. It's unbelievable,” he concluded.