The world number one is the first Italian to win at the All England Club and now has four Grand Slams to his name at the age of 23.
Sinner stayed ice cool after losing the first set, with the momentum quickly shifting, and wrapped up victory in a shade over three hours.
He had squandered three championship points in the final at Roland Garros five weeks ago but this time made no mistake as he served out for victory.
Sinner said he was living his “dream”, prompting an eruption of cheers from the Centre Court crowd.
“An amazing tournament, but mostly thank you for the player you are,” Sinner said, referring to his defeated opponent.
“It’s so difficult to play against you, but we have an amazing relationship off the court and on the court… Keep going, keep pushing and you are going to hold this (trophy) many times. You already have two!”
The tennis world has been captivated by the developing rivalry between the players to follow the storied “Big Three” era of Roger Federer, Rafael Nadal and Novak Djokovic.
Sinner and two-time defending Wimbledon champion Alcaraz have now shared the past seven Grand Slam titles between them, with the Italian winning four of those.
Defeat in Paris last month was a bitter blow for the top seed, who led by two sets and had a clutch of championship points.
Sinner said he had tried to learn from his “tough loss” on clay.
“We tried to accept the loss and just kept working,” he said. “This is for sure one of the reasons I am holding this trophy here.
“I am just so grateful that I am healthy and have great people around me, and holding this trophy means a lot.”
Prior to Sunday’s victory, Sinner had lost five consecutive times against Alcaraz, including the final of the Italian Open in the first tournament he played after returning from a three-month doping ban.
But this time he turned the tables in impressive fashion, denying world number two Alcaraz a sixth major.
Alcaraz, 22, sprayed a forehand long to hand Sinner the first break of the match but the Spaniard levelled at 4-4 to the delight of the spectators, who included Prince William and his wife Catherine, Princess of Wales.
Sinner double-faulted to hand Alcaraz a second set point and the Spaniard produced a magical backhand winner, pointing his finger to his ear as the crowd rose to their feet.
Sinner, still wearing a protective white sleeve after his nasty fall in his fourth-round match against Grigor Dimitrov, broke in the first game of the second set.
He led 3-1 after play was briefly halted by a flying champagne cork and went on to level the match with a whipped forehand.
The third set was a tense affair that went with serve until the ninth game when Sinner broke as Alcaraz slipped over on the baseline and he took a two-sets-to-one lead.
The force was now with Sinner and he broke again early in the fourth set to take the match by the scruff of the neck.
The chance was always there that Alcaraz would produce the magic he found at Roland Garros but Sinner stayed focused and snuffed out his chances.
The Italian stepped up to serve for the championship amid a cacophony of noise, sealing the deal on his second championship point.
Sinner cruised through the first three rounds at Wimbledon, losing just 17 games – equalling an Open era record set in 1972.
But he got lucky in the fourth round against inspired Bulgarian 19th seed Dimitrov, who was leading by two sets when he suffered an injury that forced him to quit.
Sinner got back into the groove against 10th seed Ben Shelton in the quarter-finals before demolishing seven-time champion Djokovic in the last four.
Alcaraz had been aiming to become just the fifth man in the Open era to win three consecutive Wimbledons after Bjorn Borg, Pete Sampras, Federer and Djokovic.
“It is a really well-deserved trophy after an unbelievable two weeks here in London for you, playing great tennis,” he said to Sinner. (AFP)