Murray, who remains fourth on the ATP rankings while Federer moves back to second behind Rafael Nadal, had lost to Federer in previous finals in Bangkok in 2005, the 2008 US Open and last January's Australian Open.
The 23-year-old Murray improved his impressive career record against 16-time grand slam champion Federer to 7 wins 5 losses as he became the first player since Andre Agassi in 1995 to win back-to-back Toronto titles.
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He also became only the fifth player to beat both Federer and Nadal in the same event.
"Winning this event is great, but so is beating both Roger and Rafa in the same week," Murray said.
"I didn't drop a set against either one of them. That is really what pleases me the most."
The title is a good omen heading into Cincinnati this week for the last major tune-up before the US Open, the year's final grand slam event, begins in New York on August 30.
"I feel great," Murray said. "This has been one of my best weeks. I'm incredibly happy. There's a sense of relief to win this one.
"But I don't want to get too far ahead of myself. There is a big event next week and the US Open coming up."
Federer, like Murray, owns just one title for the season.
"I've had an amazing run this week, which could have ended a lot earlier," 29-year-old Federer said. "I'm happy with how I've been playing. I'm excited about it. It was a good start, that's for sure. I take it week by week."
The final was plagued by a cumulative two hours of rain interruptions but Murray kept his nerve when it mattered to serve out the match.
While Murray was celebrating, Federer was plotting strategy for next week after advising that his provisional coach, Paul Annacone, would not be present at Cincinnati.
Federer will instead work next week with regular Swiss adviser Severin Luthi, failing to elaborate on the current state of his one-week collaboration with Annacone which was to have - and still could - run through the US Open.
"You deal with it. You move on," he said of the loss. "I'm planning everything for Cincy now. I'm defending champion over there, I played some awesome tennis last year. I have some work to do over there."
Murray won his 30th match of the season against 11 losses and now owns 15 career titles.
"I'm playing a bit freer and going for my shots more. I'm calm and relaxed on court," Murray said. "It's best to put your emotion into your shots. It works well.
