A substitute known by his football nickname Eder stunned the crowd with a brilliant strike from 25 yards deep in extra time to give Portugal the win.
Portugal captain and superstar Cristiano Ronaldo had been stretchered off the field midway through the first half, and the match had remained goalless after the first 90 minutes.
It has been dubbed the greatest night in Portugal's sporting history, winning the European Football Championship for the first time.
After losing the 2004 final, Portugal had a difficult road to the 2016 finale, finishing third in the group stages and only winning one match in regulation time.
In the final, Portugal was facing a much-fancied French outfit that had not lost to Portugal in 41 years and had defeated the red-and-green in the last 10 matches between the two.
Both teams had scoring opportunities early in the match, with Portugal's Luis Nani and Les Bleus' Moussa Sissoko wasting chances.
Antoinne Griezmann and Dimitri Payet gave France the attacking ascendency in the first half, but it was Payet's defense that truly troubled Portugal.
His crunching tackle on Portugal captain Cristiano Ronaldo in the 16th minute forced the superstar off the field on a stretcher less than 10 minutes later.
Ronaldo collapsed on the ground in tears as he realised he would play no further part in the final.
"Well, the armband's off, and he's off. It's the worst-case scenario for him and his team. Well, it has been the Portugal side of the story in the build-up to this final, whether Christiano Ronaldo would finally be a winner for his country. He's a winner so often in club football. Well, he obviously hoped it would be a lot longer than the 24 minutes that we've had." (crowd noise ...)
But despite the major blow, Portugal remained evenly matched with France, frustrating the host team on defence.
Centre-back Pepe, as he is known in football, and goalkeeper Rui Patricio led the way with strong performances.
Griezmann should have put the French side ahead in the 66th minute after an inswinging cross precisely met him six yards from goal, but his header was wide of the target.
The French substitue Andre-Pierre Gignac had a chance to clinch the game one minute from full-time, but his close-range shot scuttled off the near post.
Neither side was then able to break the nil-all deadlock at the end of 90 minutes, forcing the final into extra time.
As attention turned to a likely penalty shootout, a Portugal subsitute stepped up with a wonder-goal in the 109th minute.
"Here comes Eder. Not got much help. Oh, he doesn't need any help! How about that! (cheering ...) The striker who rarely scores has scored maybe the biggest goal in the history of the Portugal national team. Well, I said earlier he would have been an unlikely hero, when he had that header saved by Hugo Lloris. But that drive from distance, he could not have hit it any better!"
Eder's effort from 25 metres was enough to seal the historic Portugal victory.
After the match, French coach Didier Deschamps said his side let the tournament slip from its grasp, but he congratulated the winners.
"Yeah, even if we were missing a little bit of energy tonight, it's not an excuse. We had opportunities, the last with Gignac. After that, we continued, it was a very closed match, but we had our chances, even if the Portugese had their own opportunities as well. They scored, unfortunately. It's, uh, very disappointing. We can't throw it all out, but we missed a big chance here, maybe not unique but a very big chance, to be champions of Europe."
The final was marred by further violence under the Eiffel Tower, as riots broke out due to crowds trying to force their way into a packed fan zone.
Riot police fired tear gas and water cannons after they charged fans, who responded by throwing bottles and other missiles.
The stand-off continued throughout the match, which followed earlier clashes in the same area the night of last week's France-Germany semifinal.
