Singapore exploded in celebration Saturday after homegrown swimming hero Joseph Schooling beat US legend Michael Phelps in the 100m butterfly in Rio to win the tiny republic's first ever Olympic gold.

The 21-year-old Asian champion set a new Olympic record of 50.39sec as he edged out his American idol Phelps, who ended in a sensational dead heat for silver alongside South Africa's Chad le Clos and Laszlo Cseh of Hungary.

In Singapore cheers broke out across housing estates and social media erupted in celebration as Schooling won in Brazil.

Prime Minister Lee Hsien Loong and President Tony Tan, who was in Rio to cheer Team Singapore, led an outpouring of congratulations for Schooling, whose mixed European and Asian heritage has resonated in the immigrant society of 5.5 million people.

‘It is an incredible feat, to compete among the world's best, stay focused, and emerge victorious,’ Lee said in a Facebook post.

Schooling will receive Sg$1.0 million ($743,000) for his gold medal as part of a programme aimed at encouraging studious Singaporeans to excel in sport.

‘It's amazing that Singapore finally has a gold medal at the Olympics, I don't think anyone thought this was possible,’ Madeleine Lim, 62, told AFP.

‘Schooling winning shows that even homegrown athletes can win an Olympic medal and I think it's a good example for our youth that sporting greatness is possible,’ said real estate agent Michael Tan, 35, who cheered on Schooling at a coffeeshop in a residential estate.

- Memes and lottery -

In a country where people are obsessed with the lottery, tickets for Schooling's winning time ‘5039’ sold out by late morning while others called for a public holiday to celebrate the win.

On the internet Pokemon-themed memes celebrated Schooling's evolution from fanboy to champion, while schooling puns abounded.

Schooling met Phelps when the US Olympic swim team visited Singapore in 2008, and the American helped inspire the young Singaporean to move to the United States for extensive training at 14. Schooling is now based at the University of Texas.

He pulled off one of the biggest upsets in Rio, interrupting the 31-year-old Phelps' quest for what would have been his fifth gold in Brazil and 23rd Olympic gold of his career.

Schooling's father Colin, who hosted a viewing party at his home in Singapore, wept when his son won.

‘If I cry in front of all of you all, it's because I have nothing to be ashamed of,’ he told reporters.

‘My love for my son is nothing I can describe to you all.’

In 2014, Colin Schooling dismissed stubborn speculation that his son was a ‘foreign talent’ because of his surname -- declaring that Joseph, a third-generation Singaporean, was a true son of the republic.

A programme to import sporting talent into Singapore has proved controversial, despite helping the country to win medals in regional and international competitions.

Chinese-born female table tennis players who were naturalised by Singapore won a team silver at the 2008 Beijing Olympics and an individual bronze in London 2012.

Singapore's first Olympic medal was won by weightlifter Tan Howe Liang, who bagged a silver in Rome in 1960.