Gehrig's team record of 2,721 hits had stood since 1939. Jeter tied the mark in his 15th season.
Going into Wednesday's game, Jeter needed three hits to catch Gehrig and he got them with a bunt single in the first inning, a double in the fifth and a single in the seventh.
The opposite-field hit that tied the record sailed past a diving Chris Richard at first base and, upon reaching the bag safely, Jeter tipped his cap to the cheering home crowd.
Although Gehrig's feats are among the most cherished in team history, Gehrig and Jeter are only 54th on the all-time baseball hit list. Pete Rose holds the record with 4,256.
Jeter will try to move past Gehrig when the Yankees host Baltimore Friday.
Despite Jeter's big night, New York trailed 2-0 heading into the eighth before putting together a four-run rally.
Alex Rodriguez scored the first run in the eighth on a throwing error by Richard and Jorge Posada hit a three-run homer off Grant Balfour -- the third of four pitchers who worked in the inning.
Lance Cormier (2-3), who was on the mound to start the eighth, took the loss.
Jonathan Albaladejo (5-1) worked the seventh and eighth for the Yankees to get the win. Phil Coke struck out the only man he faced in the ninth for his second save.
New York won its fourth straight.