The Serb, who had earlier assured himself of wresting the world's No. 1 ranking from Nadal, also took took the Wimbledon crown from him Sunday.
It was Djokovic's 50th win in 51 matches and his fifth win over Nadal this year.
He became the first Serbian man to win Wimbledon, collecting his third career Grand Slam title after previously claiming two Australian Open victories.
"It's hard to describe with any words except that it's the best, most special day of my life," he told the BBC. "This is my favorite tournament and the tournament I always dreamed of winning."
Despite Djokovic's four victories over the Spanish star in finals this year, Nadal came in with a 20-match winning streak at the All England Club and remained favored to win his third Wimbledon title.
After Djokovic won the first two sets, Nadal roared back in the third, taking it 6-1, and was up 30-40 at the start of the fourth but Djokovic changed the momentum with a forehand that Nadal barely failed to return down the line.
A poor game at 4-3 down for Nadal saw him broken to 15, giving the Serb the chance he needed to serve out for the title.
Djokovic became the first player besides Nadal or Roger Federer to win at Wimbledon since Lleyton Hewitt in 2002. He pockets $1.8 million in first-place winnings with the victory.
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