Playing in his first tournament since his shock opening-round loss at Wimbledon, Nadal showed he was back to near his best, following up his semi-final win over Novak Djokovic on Saturday by easily beating the dangerous Raonic in just over an hour.
"I played a great final," Nadal said in a courtside interview.
"I love this tournament so much and I have unforgettable memories here...I'm very happy, this week has been a dream week for me."
Sunday's victory provided Nadal with his third win at the Rogers Cup, his eighth ATP title this year and his 25th Masters crown.
The Spaniard will rise to three in the world rankings when they are issued on Monday while Raonic will move into the top 10 for the first time after becoming the first Canadian man in more than half a century to reach the Rogers Cup final.
Nadal was ruthless from the outset and never allowed Raonic to settle his nerves in front of a partisan capacity crowd in Montreal.
The Canadian's big first serve, normally one of his most reliable weapons, was nullified by Nadal's aggressive returns, with the Spanish left-hander twice breaking Raonic's serve in the opening set.
By contrast, Raonic was unable to make any inroads on Nadal's serve with the fourth seed giving up just point on serve in the entire first set, which lasted a mere 32 minutes. Raonic fared better in the second set and earned three breaks points.
But was unable to convert any of them while Nadal capitalised on the two opportunities to get the double break and secure the title after 68 minutes.