Vinicius Junior and Fede Valverde struck twice each, while Karim Benzema also scored on his return from injury in Madrid's spectacular victory over their Saudi Arabian opponents.
Carlo Ancelotti's side, who qualified as Champions League winners last season, had far too much attacking quality for their opponents to handle.
Madrid's emphatic triumph at Rabat's Prince Moulay Abdellah stadium secured their second piece of silverware of the season, after winning the European Super Cup in August.
It also provided welcome respite from their La Liga campaign, where they sit eight points behind rivals Barcelona, who also beat them in the Spanish Super Cup final in January.
Madrid also won three Intercontinental Cups in 1960, 1998 and 2002 -- a match between European and South American champions, which merged with the Club World Cup in 2005.
"We are very happy, for the eighth time Madrid are champions of the world, it was what we had to do," Ancelotti told Telecinco.
"We're happy, it was a good game. We had a lot of quality up front.
"I think we were good up front, with Vinicius, Karim, Valverde, who got two, up top the team had mobility and quality."
Ancelotti brought Benzema back into the starting line-up after he had missed the semi-final win over Al Ahly with a thigh injury, with Rodrygo dropping to the bench.
The 35-year-old striker created the opening goal for Vinicius with a short pass to send the Brazilian winger through on goal.
After a frustrating spell in Spain because of racist abuse from the stands and opponents targeting him on the pitch, Vinicius was able to enjoy himself in Morocco, netting in both of Madrid's matches and crowned player of the tournament.
The same went for the team as a whole, glad to take a short break from their domestic battle with Xavi Hernandez's Barcelona to earn the title of world champions.
Valverde rifled the second goal home through defender Ali Albulayhi's legs, leaving goalkeeper Abdullah Al-Mayoof unsighted.
Former Porto striker Moussa Marega pulled one back for the 2021 Asian Champions League winners, sliding a shot past Andriy Lunin, who should have done more to keep it out.
The Ukrainian goalkeeper, standing in for the injured Thibaut Courtois, was celebrating his birthday but despite the win he had a game to forget.
For a short period it seemed the Saudi Arabian side were going to truly test their more illustrious rivals, but Madrid stepped up a gear in the second half and secured an entertaining victory.
