Ronaldo held his nerve to beat Jan Oblak from the spot after Real had been held to a 1-1 draw by Atletico Madrid in the Champions League final.
Juanfran, the Atletico defender, was the unfortunate man to miss his spot kick -- striking the post and allowing Ronaldo to fire his team to glory.
It was a dramatic conclusion to a game which only caught light in the later stages.
Sergio Ramos had headed Real in front after 15 minutes before Atletico hit back after the break.
Antoine Griezmann, scorer of 32 goals this season, should have equalized just after the interval but the forward struck the crossbar from the penalty spot after Fernando Torres had been fouled.
That miss failed to dishearten Atletico though and Yannick Carrasco, a second-half substitute, fired home from close range with 11 minutes remaining to level the tie.
The contest moved to penalties and with Real leading 4-3, Juanfran became the first man to fail by hitting the post.
That enabled Ronaldo to step forward and the Real man made no mistake -- coolly firing home to win the club's second title in three seasons.
It also ensured Zinedine Zidane, the Real coach who took over in January, has now won the trophy as both a manager and a player with the club.
For Atletico, the pain of this final defeat may yet prove more fatal than that of two years ago.
This was its chance -- Real was out on its feet for much of extra-time, struggling to deal with Atletico's extra pace and movement.
And yet, Atletico could not find a way.
Two years ago it was within touching distance -- leading 1-0 going into injury time before Ramos scored a dramatic equalizer.
Atletico never recovered -- it conceded three times in extra time and lost 4-1 in a beating so brutal that the scars still burn bright.
This year was supposed to be different. In its 10 previous meetings with Real, Atletico had only lost once -- on that night in Lisbon.
And yet, for all the pregame hype surrounding Diego Simeone's side, it was Real which dominated the opening throes of the contest.
If Real had expected its city rival to begin with the intensity and vigor it is famed for then it would have been happily surprised.
Atletico, which finished third in La Liga, one place behind Real, appeared to have frozen.
First, Casemiro was denied by Oblak from close range as Atletico's defense was caught napping in the opening minutes.
And with 15 minutes on the clock, Ramos turned home from under Oblak's nose, despite a suspicion of offside.
Real was dominating but failed to find a crucial second goal before the interval.
That was to prove costly as Atletico returned rejuvenated and should have leveled almost immediately after the interval.
Fernando Torres, who had been anonymous in the first half, was tripped by Pepe inside the penalty area after the Portuguese defender misjudged his challenge.
Griezmann, so dependable in front of goal for Atletico this season, strode forward to take the kick but his rasping effort crashed against the crossbar before rebounding to safety. That miss may have strangled the life out of a team without the level of character which Atletico boasts -- but Simeone' side refused to give up.
Stefan Savic, the defender, prodded inches wide at the far post as Real failed to clear its lines before Saul sent a fine effort wide of the far post as Atletico continued to threaten.
Real, so dominant in the first period, was reduced to playing on the break and both Ronaldo and Gareth Bale went close as Atletico pushed up in search of an equalizer.
That equalizer eventually arrived 11 minutes from time -- and when it came it was Carrasco who made sure. The winger met Juanfran's delightful cross at the far post and steered the ball past the helpless Keylor Navas.
That strike sparked wild scenes of jubilation with Carrasco racing away to celebrate by kissing his girlfriend in the stands while his teammates danced their way up the touchline.
Buoyed by restoring parity, Atletico moved forward in search of the goal which would prevent the tie from moving into extra time. Carrasco, a constant menace in attack, began to run Real ragged as those in white began to fade in the Milan night.
Ramos, never one to shy away from a tackle, was booked for a rather over enthusiastic foul on Carrasco to deny the Belgian a run on goal as the tie finished level after 90 minutes.
Real, looking increasingly weary, appeared to be struggling to compete with Atletico's energy levels with Simeone's side dominating the contest. And yet, it was Real which could have moved ahead when Ronaldo was presented with a free header at goal only to fluff his lines.
Both teams began to suffer in the final period of extra-time with numerous players struggling with cramp at the end of an exhausting season.
In the end it was left to penalties to decide the outcome of the tie and when Juanfran struck a post to leave his side 3-4 behind, it left Atletico at the mercy of Ronaldo.
Ronaldo was made for moments like these. Rarely shy of being at the center of attention, he strode forward confidently before coolly firing the ball into the net. The trademark ripping off of the shirt then followed as he raced towards his jubilant teammates.
For Ronaldo, a third Champions League title -- and another chapter in a remarkable career.
"The penalties are always a lottery," Ronaldo told BT Sport. "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."