Clarke fired a 66 to close at 15-under-par 273, bettering Thomas Bjorn (67), Ian Woosnam (68) and Padraig Harrington (70) by an honest three shots.
He replaces John OLeary as the last Irishman to win on home soil, as OLeary took the 1982 Irish Open at Portmarnock.
Clarke comments on his European Open win
While Clarke hadnt won in some 13 months on the European Tour, he was coming off a fine showing at last weeks Murphy's Irish Open, when he finished second.
On Sunday, it didnt take long for the Ferrari-loving golfer to get the juices flowing in front of hundreds of jovial fans at the K-Club.
Clarke birdied the par-5 4th and followed it up with an immediate birdie at the fifth to tie the lead at 11-under.
As quickly as he began moving in the right direction, however, it seemed Clarke may have hit the bricks at the par-4 6th, when he yanked his approach shot left and towards trouble.
Yet to everyones shock, Clarkes ball hit a greenside tree dead-on and then bounced back on the green to within six feet of the cup.
An embarrassed Clarke made quick work of his fortune, canning the putt for his third birdie in a row, and taking the outright lead.
Despite a bogey at the seventh, he again rebounded immediately with red numbers at the eighth and ninth to go out in 31, prompting thoughts of 1999, when Clarke went around the K-Club in a record 60 strokes.
While he wouldnt shoot 60 this time around, he did chalk up another birdie at the 11th and canned a ten-footer from just off the green at the par-5 16th for a fine 66 and minus-15 score.
Check out Darren Clarke's scorecard!
The roars and the support I had followed on from last week, the only difference here was that I gave myself a better chance to win and this time I took it, said Clarke, whose last win came at the 2000 English Open.
Take it, he did. Yet, Clarke wasnt the only one to win a prize Sunday.
Although Bjorn didnt win the tournament, he did not leave Dublin completely empty-handed.
Thanks to his closing eagles at the par-5 16th and 18th holes, the Danish star was the recipient not only of second-place money, but a 100,000 pound diamond pendant given annually to the golfer who scores the lowest on the par-5 holes. Bjorn ended at minus-12 on the long holes.
I think my wife is going to be a little bit happy, thats for sure, joked Bjorn. I dont know what to do with it right now, but Im sure well have a little bit of fun with it.
Woosnam also eagled No. 18, and recorded his best finish of the year. He also gave hope that at 43 years of age, he is not quite done winning on the European Tour. His last came at the 97 Volvo PGA Championship.
Harrington, too, still searches for his first win of the season. A two-time champion in 2000, the Irishman has now finished second five times this season.
While Jarmo Sandelin struggled Sunday with a 77, United States Open champion Retief Goosen shot 66 on the final day to end in a tie for sixth at 10-under.
Mark Mouland (68) also ended strong in outright fifth at minus-11, his best showing since the Argentina Open.
Full-field scores from the Smurfit European Open