Following a slow start at Tokyo's Ryogoku Kokugikan, Murata took control with a series of combinations as N'Dam found it increasingly difficult to move away from his opponent.
Murata, who improved his record to 13-1, landed more precise and effective punches in the fifth round before a right hand backed N'Dam into the ropes a minute into the sixth.
In a completely one-sided encounter, a weary N'Dam was convinced he could no longer continue after seven rounds as he suffered his third loss in 39 professional bouts.
Murata became only the second Japanese to win a world middleweight title after Shinji Takehara in 1995.
"This victory was for everyone," Murata was quoted as saying by Kyodo news agency. "The hard part starts after I win the belt. It was the same with the Olympics. Getting there was the easy part, moving forward after that was the hard thing."
"I hope this inspires those (in Japan) who love boxing. I hope they aspire to be middleweight champs and be stronger boxers than I am."
Murata dominated their first bout in May but two judges, Panama's Gustavo Padilla and Canadian Hubert Earle, scored the fight for N'Dam, who took the vacant title.
WBA president Gilberto Mendoza called for the rematch and apologised for the decision, suspending Earle and Padilla over their scoring of the fight.
(Reporting by Hardik Vyas in Bengaluru; Editing by Clare Fallon)
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