His exceptional defence repelled the powerful game of Canadian Raonic, who found the going too tough in his first grand slam final.
Murray gave an all-court masterclass, clinching his third grand slam title in his 11th final.
The 29-year-old's success came in his first final with Ivan Lendl since his 2013 Wimbledon success and maintained the dominance of tennis' big four.
At the moment of victory, Murray dropped his racket to the grass before leaping in the air in celebration of another piece of British sporting history.
Once back in his seat, the emotion of the occasion took a grip of Murray.
"I'll make sure I enjoy this one for sure," Murray said after being presented with the trophy.
For the third time in his career, Murray walked out to a wall of Centre Court noise on finals day. For his opponent, this was all new.
In this era where longevity among the top players is the norm, Raonic still counts as the new generation at 25 years old, and he has never been afraid of stating his belief that he could challenge for the sport's greatest honours.
With the help of John McEnroe, hired to help him during the grass-court season, Raonic has come out of his shell and his five-set win over Roger Federer in the semi-finals felt like a watershed moment.
The key question was how he would handle the occasion and Murray kept him waiting as he prepared to serve first, but there were no signs of nerves as Raonic hit 139 miles per hour with his big weapon.
The problem for the sixth seed was that his strength played to Murray's, and the Scot was dialled in straight away on the return. That earned him a break point in the third game but Raonic fought off the danger.
Raonic won the first set against Murray this year in both the Australian Open semi-finals and Queen's Club final but could not get across the line in either.
It was crucial for his chances that he did the same here but he found himself under huge pressure again in the seventh game and Murray capitalised. Raonic was tentative on his approach shot and netted a forehand volley.
The Canadian's net play has been a revelation this tournament but Murray has so much more in his arsenal and there were no real alarms as he clinched the opening set with a simple volley after 40 minutes.
The Duke and Duchess of Cambridge were among the spectators in the Royal Box, along with Prime Minister David Cameron and Scotland's First Minister Nicola Sturgeon.
Of Murray's 10 previous slam finals, two of which came this year, three had been against Federer and seven against Novak Djokovic, but being the favourite for the first time had not given him the jitters.
He has an excellent record against big servers and looked totally confident that he had the game and the game plan to emulate his 2013 triumph.
It was almost deja vu as Murray pulled off a series of trademark dipping passing shots to force a break point in the seventh game but missed one at the crucial moment and Raonic escaped.
Raonic must have shaken his head in disbelief in his next service game when Murray not only returned a 147mph serve, the equal second fastest ever at Wimbledon, but won the point.
However, the Scot was falling short when it came to taking his hard-won chances and two more break points went begging, making it only one converted from five opportunities.
Murray would have hoped to avoid tie-breaks having lost four of his previous five against Raonic but this would be different.
The world number two won the first three points and then moved 4-1 and two mini-breaks ahead with some staggering defence, even by his standards, followed by a forehand winner. It was a hammer blow to Raonic and a second serve onto the line clinched the tie-break 7-3 for Murray.
Raonic took a lengthy bathroom break ahead of the third set. Such a tactic had helped Murray win his first grand slam title at the US Open in 2012 but Raonic was in a much deeper hole.
No man had come back from two sets to love down to win Wimbledon since 1927 while Murray's only career loss after winning the first two sets was on his first trip to the All England Club in 2005.
Even when Raonic did create an opening, bringing up his first two break points at 2-2 in the third, it was ultimately still a disheartening moment as Murray saved them both, the Scot determined not to offer his opponent any encouragement.
The 29-year-old has been supremely focused throughout the tournament under the emotionless gaze of Lendl, and this performance was the ultimate validation of his decision to rehire the eight-time grand slam champion.
To his credit, Raonic kept Murray and an expectant Centre Court crowd at bay to force another tie-break, but the world number two was not about to be denied. He was utterly ruthless in winning the first five points, and at 6-1 he had five match points. He needed only two, clinching victory when Raonic netted a backhand.
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