Raonic unleashed his usual serving blitz but it was the rangy Canadian's groundstrokes that impressed the most as he outwitted the Swiss with a masterful display of clean hitting from the baseline.
Federer, irrepressible in his semi-final win over Dominic Thiem, was off-colour from the start at Pat Rafter Arena and his 25-year-old opponent feasted repeatedly on his wayward backhand.
Beaten in three tight sets last year, Raonic won at a canter in the rematch to clinch his eighth tour title and complete the perfect build-up to his bid for a maiden grand slam at the Australian Open starting later this month.
Closing out the match with a booming first serve that Federer could only parry long, Raonic roared in triumph, having beaten the 17-times grand slam champion for only the second time in 11 encounters.
He accepted the winner's trophy from 77-year-old Australian great Rod Laver, the only player to complete the calendar grand slam twice.
"Hopefully (we have) a better year this year than the last," Raonic said in his victory speech, delivering a message of peace.
"I hope in 2016 we learn to love each other a little bit more and the world becomes a safer place."
Although wearing a furrowed brow for much of the match and showing rare negative body language, Federer was gracious in defeat but referred to a flu that had troubled him during the week.