It was the fourth Olympic gold medal for Wiggins and his seventh medal overall, making him the most decorated British athlete in the history of the Games.
American Kristin Armstrong won the women's time trial, returning from retirement to capture the event for the second straight Olympics. After the race she said she was now "officially retired."
Wiggins became the first British rider to win the Tour de France with a dominating performance, highlighting a career that began with him riding track races.
He is now the top road racer in the world, which he confirmed with a victory of almost a minute over the 44-kilometer course that began and ended on the grounds of Hampton Court Palace.
Wiggins covered the distance in 50:39.54 with current world champion Tony Martin of Germany finishing second in 51:21.54. Another British rider, Christopher Froome, wound up third in 51:47.87.
Defending champion Fabian Cancellara of Switzerland, who suffered a heavy fall during the road race held earlier in the Olympics, finished seventh.
Wiggins won the individual pursuit race on the track at both the Beijing and Athens Olympics and was part of Britain's winning group in the team pursuit race four years ago.
He also won a silver and two bronze medals in track events in 2004 and 2000.
Enormous crowds came out to watch Britain's cycling hero, but before he rode the fans saw Armstrong record a solid victory.
At age 38, she said she came out of retirement in hopes of being able to hold her young son at the top of the medal podium.
Jacob, who will celebrate his second birthday next month, was in his mother's arms as she stood on the top step for the second Olympics in a row.
The women rode 29 kilometers and Armstrong was timed in 37:34.82. Germany's Judith Arndt was second in 37:50.29. Olga Zabelinskaya of Russia took the bronze in 37:57.35.