The world number four made it 12 successive victories by recovering from dropping the first set to blow the Spaniard away, claiming a 3-6 6-2 6-0 success to add the Rakuten Japan Open Tennis Championship title to the one he won in Thailand a week ago.
It was sweet revenge for the Scot over the world number two, who had beaten him five times in a row coming into the match, including in the semi-finals of Wimbledon and the US Open. And he completed a memorable weekend by then teaming up with brother Jamie to take the doubles title with a 6-1 6-4 thrashing of Frantisek Cermak and Filip Polasek in the doubles final.
The triumph over Nadal also earned Murray his 20th career title and improved his chances of replacing Federer as world number three before the season is out.
"I need to keep up the wins and hopefully I'll get to the number three ranking," the 24-year-old said on www.atpworldtour.com.
"It's not the ultimate goal, but it's the target I set for the last few tournaments this year."
And it looks a very achievable one given the way he tore apart 10-time major winner Nadal in the final set to clinch the title in style.
"I played some great tennis, especially in the third set," Murray added.
"There was a lot of close games towards the end of the first set and beginning of the second and I managed to get the momentum and didn't give him many chances after that.
"For sure in the third set it was some of the best tennis I've played against him. I was very consistent, didn't make too many mistakes and kept a cool head in the important moments."
The way Murray is playing at the moment suggests he would have beaten Nadal in the semi-finals of the last two grand slams had he have showed such form back then, but normal service seemed to be the order of the day when Nadal broke Murray early in the first set.
Murray's serve was shaky throughout the set, although Nadal failed to cash in and took it with just the one break.
Something happened to Murray during the end-of-set break, though, and he left his chair for the second seemingly a different player.
After adjusting some strapping on his ankle he began to dominate Nadal from the baseline and move him around, breaking through in the fourth game of the set.
Nadal, looking for a first hard-court title since he won this event a year ago, then earned himself three break points at 0-40 but three aces from Murray saw him off and he then broke again to take the set and level the match.
The Majorcan looked anything but a 10-time major winner in the decider, almost conceding that Murray was headed for the victory as shot after shot found the corners and the baseline.
The Scot broke three times to complete a humiliating final-set whitewash of Nadal and end his losing run against the Spaniard.