The first match had ended in an all-out brawl, with three players sent off and two taken to hospital.
Elsewhere, Hungary swept past the Dutch East Indies in the opening round and the Swedes routed Cuba 8-0 in the second.
The Cubans, who were only at the finals because Mexico had pulled out, emerged with some credit having earlier drawn 3-3 with a strong Romanian team and won the replay 2-1.
France beat Belgium but lost 3-1 in the quarter-finals to Italy. For the first time, the host nation would not win.
Brazil were fancied to beat champions Italy in the semi-final but the Brazilian coach Adheniar Pimenta blundered tactically.
He rested Leonidas, the tournament's top goalscorer, and Italy duly won 2-1 before going on to meet Hungary, who had cruised past Sweden.
Italy dominated the match, with two goals each for Colaussi and Piola and their 4-2 victory made them back-to-back World Cup winners.
Dr Ottorino Barassi, the Italian Fifa vice-president, then kept the trophy safe in a shoe-box under his bed throughout the Second World War.
Preliminary round results:
Switzerland 1-1 Germany (aet)
Czechoslovakia 3-0 Holland (aet)
Italy 2-1 Norway (aet)
France 3-1 Belgium
Hungary 6-0 Dutch East Indies
Brazil 6-5 Poland (aet)
Cuba 3-3 Romania (aet)
Preliminary round replay results:
Switzerland 4-2 Germany
Cuba 2-1 Romania
Sweden 8-0 Cuba
Brazil 1-1 Czechoslovakia (aet)
Hungary 2-0 Switzerland
Italy 3-1 France
Brazil 2-1 Czechoslovakia
Italy 2-1 Brazil
Hungary 5-1 Sweden
3rd/4th place play-off:
Brazil 4-2 Sweden
World Cup Final:
Italy 4-2 Hungary