The 34-year-old became the first Korean artist to top the weekly UK chart, helped by the success of a video shot in locations around Gangnam, an upmarket neighborhood in the South Korean capital, Seoul.
Psy, whose real name is Park Jai-sang, spawned hundreds of online imitators with his unusual dance move, where he pretends to ride an invisible horse. It topped the U.S. digital songs chart earlier this week.
Last week's UK number one, Irish band The Script, slipped to second place with "Hall of Fame". Third place went to U.S. rapper Flo Rida's "I Cry".
There was a new entry at the top of the album chart for English folk rock band Mumford & Sons and "Babel".
(Reporting by Peter Griffiths; Editing by Robin Pomeroy)
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