Kanaeva, who owns a mind-boggling 17 world titles, was a class apart from her rivals as she picked up top scores on three of the four apparatus - hoop, ball and clubs - to run away with the title with 116.900 points.
Compatriot Daria Dmitrieva produced a rousing finale featuring ambitious throws and spins with the ribbon but was still eclipsed in the overall standings by 2.400 points. Belarusian Liubou Charkashyna was left shedding tears of joy as she snatched bronze with 111.700.
Kanaeva extended Russia's winning run in the discipline for a fourth successive Olympics following the success of Yulia Barsukova in 2000 and Alina Kabaeva in 2004.
The 22-year-old's imaginative choreography packed with complex manoeuvres won her four standing ovations and cries of "Bravo, Bravo" at Wembley Arena which was awash with Russian flags.
Two days after a runaway hoop caused her grief in qualifying, she was back to her best as she kept the circular object firmly in check during her opening number to Stravinsky's the "Rite of Spring".
Chants of Rus-si-a, Rus-si-a echoed around the arena as she leapt around the mat catching the ball on her neck as she arched back into an aerial splits and finished off with a fast-paced Biellmann spin holding the ball aloft.
She increased her lead even further with her speedy, acrobatic juggling act and by the time she stepped out with a green, white and purple ribbon, her rivals knew they were battling it out for the minor medals.
"Gymnastics has been part of my life since I was six-years-old. Since that time I have practised every day, eight hours a day so I'm delighted to have won golds at two Olympics," Kanaeva said.
"It was not my target to be a legend but I do like the sound of it. I love gymnastics and I want the audience to remember me."
Dmitrieva, who only found out a week before the London Games that she would be competing at Wembley, paid tribute to the champion.
"I think she's the most impressive person to have these two gold medals. Isn't that amazing? She's an inspiration," she said.
If there was a prize available for being the most excited athlete, Charkashyna would have won it hands down.
She punched the air after ending her first routine, kissed the knuckles on her clenched fist following the second, blew kisses to the crowd after the third and then dissolved into tears when her final score flashed up.
"This is not bronze for me, it's gold. Russians are untouchable so for me this is like winning the gold," Charkashyna said after skipping off the podium.
Former Soviet states have won every individual medal in the event since 1996 but delightful South Korean challenger Son Yeon-jae had looked set to end that run on Saturday as she stood third at the halfway point.
However, a day after a shoe went flying during her juggling act, she was thrown off balance again as a club slipped out of her sweaty palm to snuff out her medal hopes. She finished fifth.