Farah delivered on huge pre-Games expectations in front of an ecstatic home crowd who roared him every step of the way.
The 29-year-old, who also became the first man to win this event on home soil, took the gold medal with a time of 27 minutes 30.42 seconds, half a second ahead of his American training partner Galen Rupp who grabbed a surprise second place.
Ethiopia's Tariku Bekele claimed bronze with his older brother Kenenisa, who was bidding for an unprecedented third 10,000m Olympic gold, in fourth.
"I just can't believe it, the crowd got behind me so much. I've never experienced anything like this. The best moment of my life, something I've worked so hard for," said Farah, who had dropped to his knees in elation after crossing the line.
"My legs were getting tired and I had to dig in that last bit. But the crowd helped me to get through. Unbelievable. My childhood, my coaches, I can't thank enough people."
On a balmy night for British fans, Farah grabbed a third athletics gold medal for the host nation, a haul they have never achieved before in one day.
The 25-lap race had been a nervy one up until the final lap when Farah broke away. To deafening cheers he found an extra burst of energy on the last bend that took him over the line to raucous applause.
For Farah, 5,000m European and world champion and 10,000m European champion, Saturday's victory over the longer distance was all the sweeter after letting the 10,000m world title slip from his grasp in South Korea last year where he was pipped on the line and forced to settle for silver.
The man who moved to England from Mogadishu, Somalia at the age of eight will have a chance of double gold in London as he is also down to run the 5,000m.
His profile has rocketed since moving from leafy west London to America in 2011 and switching to a new trainer in three-times New York marathon winner Alberto Salazar.
"Seeing my daughter was so emotional. Coming out running to me, wow," Farah said, having rushed to embrace his daughter and pregnant wife on the track to huge cheers.
Farah played tribute to the crowd, his coach Alberto Salazar and his best friend and training partner Galen Rupp, who chased him home with a silver.
“If it wasn’t for the crowd I don’t think that would have happened. It was just incredible they gave me that lift and that boost,” he said.
“A lot of people thought that having an Olympics in London adds a lot of pressure, obviously there is pressure but sometimes you have got to use the crowd and that made a difference for sure.
“They made me work hard for it, there were a lot of surges and they were trying to take the kick out of me.
“But me and Galen just stayed patient. Alberto always says just make sure you are there and then come home strong and that is what we did.”
Rupp, who became the first American to win a medal in the event since Billy Mills won it in 1964 in Tokyo, was delighted for his training partner.
"I'm thrilled for Mo. It's unreal. Two training partners coming in first and second, I couldn't be happier. I wouldn't be where I am today without him," Rupp said.
"We work hard. I'm the lucky one - I get to train with the best middle-distance runner in the world."
Greg Rutherford had continued a superb day at the Olympics for Great Britain just minutes prior when he won gold in the men's long jump with a monster 8.31m leap before Farah raised the decibel levels further in East London.
The self-styled "Ginger Wizard" led the competition from his second jump of 8.21 and, with the crowd roaring him on, improved it by 10cm with his fourth, which proved beyond the rest of the field and allowed him to foul his last two attempts.
The 25-year-old had already watched as compatriot Jessica Ennis danced past the long jump pit in front of the frenzied crowd on her lap of honour after winning the heptathlon.
Rutherford was not going to be outdone.
Covering himself in the Union Flag, he walked around the perimeter of the arena shaking hands with a fair few of the 80,000 spectators before leaping into the stands to embrace his parents.
Making his way back to the long jump area, he gave the take-off board a pat and grabbed a handful of sand from the pit before standing trackside and watching as Farah won Britain's third gold of the night in the men's 10,000m.
"It's the most incredible feeling in the world," Rutherford said. "I thought I was going to jump further but I'm Olympic champion, so who cares?
"What a night for British athletics, three gold medals out of a possible three. I got to see my folks in the crowd.
"I don't think it's sunk in properly. I knew I wanted to be an athlete and I knew I wanted to be Olympic champion. I might wake up in a minute."
The only other Briton to win the men's long jump Olympic title was Lynn Davies in Tokyo in 1964 and the last time the gold medal was won with a jump shorter than Rutherford's was when Randy Williams leaped 8.24m to win in Munich in 1972.
The blustery wind that swirled inside the Olympic Stadium had something to do with the quality of the competition but it was also a reflection of a season where Rutherford's 8.35m was the joint best.
Australia's Mitchell Watt, the form jumper of 2011, grabbed a silver to go with the one he won at the world championships last year with a jump of 8.16m on his final attempt.
It is a measure of how far the 23-year-old Queenslander has come since taking up the sport again just four years ago that he will be disappointed not have got anywhere near his personal best of 8.54m.
"My best jump was when Jessica Ennis was going past, so I just pretended I was British for about 30 seconds," he laughed.
American Will Claye fouled on his final attempt to exceed Rutherford's mark and had to be satisfied with bronze courtesy of his fourth jump of 8.12m.
Claye said he had never seen a crowd like that which packed the Olympic Stadium on Saturday night.
"They were awesome," he said. "They supported the event and clapped loud for all of us. It's made it comfortable for all of us."
Although the United States will now go through two Olympics without the long jump title for the first time, Claye is the triple jump indoor world champion and will also compete in that event.
"I know what to do. I know the track," he said. "People ask me why do I do both - because I can do both. I think I can win gold."
Defending champion Irving Saladino, Panama's first Olympic gold medallist, failed to qualify for the final, while four-times world champion and 2004 Olympic champion Dwight Phillips missed the Games because of an Achilles injury.
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