Walsh, coming off a record-setting collegiate season for the University of Virginia, clocked 55.18sec to eclipse the prevous record of 55.48sec set by Sweden's Sarah Sjoestroem at the 2016 Rio Olympics.
The 21-year-old is trying to make her first Olympic team after winning medley relay gold along with freestyle relay silver and 50m fly bronze at the 2023 world championships in Fukuoka.
She electrified the crowd at Lucas Oil Arena, home of the NFL's Indianapolis Colts, in the first event of the opening finals session at the nine-day meeting -- where only the top two finishers in each event can qualify for the Paris Games.
American record-holder Torri Huske had made a run at Sjoestroem's mark in the first semi-final, hitting 50m under world record pace before finishing in 55.79sec.
Walsh, who had never broken 56 seconds until she posted 55.94 in the heats on Saturday morning, then roared through the second semi-final, staring at the scoreboard in disbelief as the time flashed up.
She'll try to secure her place in the team for Paris in Sunday's final when the field will also include Tokyo Olympic medallist Regan Smith, who was third-fastest in the semis in 55.92sec.
Meanwhile seven-time Olympic gold medallist Ledecky, who burst onto the international scene as a 15-year-old with her victory in the 800m free at the 2012 London Olympics, is Paris bound after winning the 400m freestyle in 3min 58.35sec.
Paige Madden, a finalist in Tokyo, was second in 4:02.08.
Ledecky's time was her fastest since 2022. Even though she's still the world's dominant force in the 800m and 1500m free, Ledecky will arrive in Paris chasing Australian world record-holder Ariarne Titmus and Canadian teenager Summer McIntosh.
Titmus dethroned Ledecky in the 400m at the Tokyo Olympics and broke Ledecky's longstanding world record in the event in 2022.
McIntosh broke the record last year before Titmus reclaimed the mark, and Titmus signalled her intentions for Paris with the second-fastest time ever -- a blistering 3:55.44 -- at the Australian trials on Monday.
