A stroke behind pacesetting Briton Lee Westwood overnight, the American left-hander fired a five-under-par 67 to post a 16-under total of 272 at Augusta National.
Cheered on by huge galleries including his wife Amy and three children as he walked up the 18th fairway at a sun-splashed Augusta National, Mickelson put the seal on an emotional victory with an eight-foot birdie putt at the last.
He thrust both arms skywards in triumph before hugging his caddie, shaking hands with Westwood and then embracing his wife just off the green.
Westwood, who had been seeking his maiden major title and Britain's first since Paul Lawrie won the 1999 British Open, had to settle for second place after carding a 71.
American Anthony Kim closed with a sparkling 65 to finish third at 12 under, a stroke in front of world number one Tiger Woods and KJ Choi of South Korea, who returned matching 69s.
Mickelson, who won his first two Masters crowns in 2004 and 2006, effectively wrapped up the title with back-to-birdies from the par-three 12th.
He rolled in a curling 14-footer on the 12th green, and then narrowly missed an eagle putt from just three feet at the par-five 13th before holing out from a similar distance coming back.
That put him two strokes clear before he picked up another shot at the par-five 15th after reaching the green in two and two-putting, to tighten his grip on a third Green Jacket.
Kim began another sun-splashed day at Augusta seven strokes off the pace but he surged into contention with a sizzling birdie-birdie-eagle-birdie run from the 13th.
Choi briefly joined Mickelson in a share of the lead with eight holes to play before slipping back with bogeys on 13 and 14.
Four-times champion Woods, playing his first event in nearly five months with his private life having spectacularly unravelled at the end of last year, endured a roller-coaster day.
He started out poorly with three bogeys in the first five holes before he recovered in spectacular fashion.
Woods holed out from the fairway for a stunning eagle at the par-four seventh where his ball pitched 20 feet left of the pin before slowly making its way down the slope into the cup.
After a brief pause the world number one raised his arms in celebration before breaking into a huge smile.
He then birdied the next two holes, getting up and down from just off the green at the par-five eighth and rolling in a six-footer at the par-four ninth.
After mixing bogeys at the 11th and 14th with a birdie at the 13th, he collected another eagle when he coaxed in a 15-footer at the par-five 15th before signing off with a six-foot birdie putt at the last.
FINAL SCORES:
272 - Phil Mickelson 67 71 67 67
275 - Lee Westwood (Britain) 67 69 68 71
276 - Anthony Kim 68 70 73 65
277 - Tiger Woods 68 70 70 69, KJ Choi (South Korea) 67 71 70 69
279 - Fred Couples 66 75 68 70
280 - Nick Watney 68 76 71 65
281 - Yang Yong-eun (South Korea) 67 72 72 70, Hunter Mahan 71 71 68 71
283 - Ricky Barnes 68 70 72 73, Ian Poulter (Britain) 68 68 74 73
285 - Miguel Angel Jimenez (Spain) 72 75 72 66, Jerry Kelly 72 74 67 72
286 - Ryan Moore 72 73 73 68, David Toms 69 75 71 71, Trevor Immelman (South
Africa) 69 73 72 72, Steve Marino 71 73 69 73
287 - Ernie Els (South Africa) 71 73 75 68, Scott Verplank 73 73 73 68,
Adam Scott (Australia) 69 75 72 71, Angel Cabrera (Argentina) 73 74 69 71, Heath Slocum 72
73 70 72, Tom Watson 67 74 73 73
288 - Ben Crane 71 75 74 68, Matt Kuchar 70 73 74 71
289 - Kenny Perry 72 71 72 74, Geoff Ogilvy (Australia) 74 72 69 74, Bill Haas 72 70 71 76
290 - Yuta Ikeda (Japan) 70 77 72 71
291 - Jason Dufner 75 72 75 69, Steve Stricker 73 73 74 71, Francesco Molinari (Italy) 70
74 75 72, Charl Schwartzel (South Africa) 69 76 72 74, Soren Kjeldsen
(Denmark) 70 71 75 75, Sean O'Hair 72 71 72 76
292 - a-Matteo Manassero (Italy) 71 76 73 72, Lucas Glover 76 71 71 74
294 - Retief Goosen (South Africa) 74 71 76 73, Dustin Johnson 71 72 76
75, Camilo Villegas (Colombia) 74 72 71 77, Steve Flesch 75 71 70 78
295 - Zach Johnson 70 74 76 75
296 - Robert Karlsson (Sweden) 71 72 77 76, Mike Weir (Canada) 71 72 76 77
298 - Chad Campbell 79 68 80 71, Robert Allenby (Australia) 72 75 78 73, Sergio Garcia
(Spain) 74 70 76 78
302 - Nathan Green (Australia) 72 75 80 75
Phil Mickelson putting on his green jacket as he wins the 2010 US Masters. (Jamie Squire/Getty Images/AFP)