Hughes looked favourite for gold coming out of the bend having stormed into a commanding lead during the first half of the race, but he began to fade on the home straight.
Trinidad and Tobago's Jereem Richards threatened to overhaul the 22-year-old's lead, crossing the line in exactly the same time but initially being awarded the silver medal as Hughes appeared to have held on for gold.
However, Trinidad and Tobago filed a protest after the race due to an alleged obstruction by Hughes in the dying stages, with the Englishman appearing to reach across the lanes and clash with Richards.
A nervous wait followed as officials ruled over whether it was a deliberate obstruction or just a loss of balance, but Hughes's proximity to the edge of his lane throughout proved to be enough to confirm his disqualification - a decision England have appealed.
The controversial finale ultimately saw Richards claim gold, while it was also good news for Northern Ireland's Leon Reid, who was bumped up to bronze to win his country's first ever sprinting medal at the Commonwealth Games.
Canada's Aaron Brown - whose time of 20.34s saw him cross the line in third place - picked up silver, while South Africa's Clarence Munyai's fifth-placed finish proved to be just three-hundredths of a second off a medal place.
Jamaica's Warren Weir - a silver medallist in Glasgow four years ago - finished last in the race, crossing the line in a time of 20.71s.