The match ended 1-1 after extra time as Atletico, giving their usual never-say-die performance, conceded an early goal, missed a penalty, clung on by the skin of their teeth and then found the strength to equalise at the San Siro.
But it was all in vain as Juanfran struck their fourth penalty against the post, allowing a previously subdued Ronaldo to stride up and coolly blast home the decisive penalty for a 5-3 shootout win - his third European Cup success.
Real's former playmaker Zinedine Zidane was left to celebrate winning Europe's elite club competition five months after starting his first coaching job and become the seventh man to claim the trophy as both a player and a manager.
But it was another demoralising end for Diego Simeone's Atletico who were within a minute of winning the 1974 European Cup final and 2014 Champions League finals but conceded equalisers and eventually lost them both.
The latter was also against Real when Sergio Ramos scored in stoppage time to set his side up for a 4-1 extra-time win.
This time, Ramos gave Real a 15th minute lead but, after Antoine Griezmann missed a penalty for Atletico at the start of the second half, the Mattress Makers hit back with a superbly-taken equaliser by substitute Yannick Carrasco.
Real captain Ramos, who converted their fourth penalty, said the title was “just reward” for their hard work. “We knew that it was a unique chance to make history and after an up and down season it is a reward,” he said.
Real were pipped to the La Liga title by one point on the final day of the season by arch rivals Barcelona.
Match-winner Ronaldo added: “The penalties are always a lottery, you never know what will happen, but our team showed more experience and we showed it by scoring all the penalties. A fantastic night for us.”
Atletico's shattered coach Simeone added: “It hurts to see the people who paid for the tickets and I couldn't give them what they wanted. That hurts more than anything else.
“I'm proud of my players, they've made an extraordinary effort, to beat Barcelona and Bayern Munich (in earlier rounds). The effort was really tremendous.”
Atletico, European football's arch-destroyers, have made a habit of upsetting more technically gifted, financially powerful opponents and once again set out to frustrate and nullify Real.
They showed their intentions with some heavy tackles early on but their plan threatened to unravel when a heavy challenge by Gabi led to a free kick which was floated in by Toni Kroos and headed on by Gareth Bale for Ramos to bundle home.
Real looked supremely confident and there was some premature showboating, but Atletico, initially uncomfortable at having to chase the game, forced their way back into the match.
The second half began dramatically when Pepe clumsily caught Fernando Torres' ankle in the area to give away a penalty but Griezmann fired against the underside of the bar, possibly distracted by Keylor Navas's antics on the goal line.
A breathless spell followed as Atletico, leaving gaps at the back, had a series of dramatic escapes.
Karim Benzema had the chance to settle it for Real when he broke clear down the right but Atletico keeper Jan Oblak judged the situation perfectly and blocked the Frenchman's shot.
Slovenian Oblak also made a superb stop from Cristiano Ronaldo and Stefan Savic cleared Bale's shot off the line.
Atletico immediately went down the other end where Griezmann lifted the ball to Juanfran, who volleyed the ball across the area for Carrasco to fire home from close range.
That could have been the turning point, but instead Atletico ran out of steam.
The pace of the match slowed and neither side really looked like winning it in extra time, with Ronaldo looking short of full-fitness but with Zidane having already used up his three substitutes.
Real won the toss for the penalties and chose the end where their fans were based.
The first seven penalties were all converted until the hapless Juanfran saw his effort hit the post, leaving the way for Ronaldo to win another European title for his side.
Original source: PICS: Ronaldo helps Real lift Champions League trophy