The Spaniard won for the third straight year at Roland Garros with a 6-3 5-7 6-1 6-1 victory in a high-quality final.
The 33-year-old is the first player to win 12 singles titles at the same Grand Slam and has now won 18 majors overall.
“I can’t explain what I’ve achieved and how I feel. It’s a dream,” said Nadal.
“To play for the first time in 2005 – I never thought in 2019 I’d still be here. It’s an incredible moment and very special for me.”
It leaves the left-hander two Grand Slam titles adrift of Switzerland’s Roger Federer, who he beat in the semi-finals, and three clear of Serbian world number one Novak Djokovic, whose bid to hold all four majors was ended by Thiem.
The second seed slid to the red dirt in triumph when he clinched victory on the second match point, lying behind the baseline with his arms outstretched as he contemplated the magnitude of his achievement.
With clay plastered over his back, he clambered to his feet and took the acclaim of an enthralled Roland Garros crowd which has become accustomed to seeing him triumph.
Thiem, 25, suffered his second Grand Slam final defeat after losing in three sets to Nadal in last year’s final.
Hundreds of Spanish fans milling around outside Chatrier, identified by their red and yellow flags, football shirts and facepaint, has become an almost annual event before the men’s final at Roland Garros since 2005.
Nadal has won on all but three of his appearances here, with his only defeats coming in the 2009 fourth-round by Robin Soderling and 2015 quarter-finals against Djokovic. In 2016, he pulled out before the third round with injury.
That meant he went into Sunday’s final with a Roland Garros record of 92 wins and two defeats.
A fiercely contested first set was closer than the scoreline suggests, Nadal rattling off the final four games to edge ahead after 55 tense minutes.
Both players understood the importance of making a quick start, Nadal attempting to take advantage of any mental and physical fatigue in his opponent, who only finished his delayed semi-final against top seed Djokovic less than 24 hours earlier.
The result was a physical battle, full of intense rallies as each man tried to gain the upper hand by brute force.
Thiem earned the first break point of the match at 2-2, putting away an overhead which left many inside Chatrier – which only included a handful of red and white-clad Austrian fans – jumping to their feet in celebration.
Nadal responded instantly, earning three break points in the next game and taking the second with a precise forehand which fizzed past Thiem.
Sticking with Nadal was one thing, turning that into taking a set off the champion proved to be a tougher task.
Nadal saw off another break point in a lengthy service game for a 4-3 lead, a pivotal moment as he moved 5-3 ahead as an aggressive backhand rocked Thiem on break point.
That left Nadal serving for the opening set, which he clinched when Thiem dragged a backhand wide on the second set point.
Thiem knew he could scarcely afford to go a set behind the reigning champion – and falling two adrift would have all but extinguished his hopes.
Following the intensity of the opening set, the level dropped in the second as serve dominated.
Only six receiving points were won in the opening 11 games – five for Nadal and just one for Thiem – before Thiem, out of nowhere, found himself with two set points.
And the Austrian levelled the match when Nadal blinked again, hitting a backhand long after a 10-shot rally.
But the exertions of winning that set, playing four days in a row and having 24 hours fewer than Nadal to recover from the semi-finals, perhaps took their toll.
Nadal nipped off court at the end of the set, possibly for a mental reset as much as anything else, leaving Thiem waiting on the baseline for the start of the third set.
Whether Nadal was using delaying tactics or not, the break of momentum worked.
Thiem delivered a poor service game as Nadal broke to love, the Spaniard backing that up with a hold to love sealed with an exquisite stun volley that even prompted a thumbs up from the Austrian.
Nadal won the opening 11 points of the third and clinched the double break with a trademark forehand down the line, an exuberant quadruple fist-pump celebration along the baseline stressing its importance.
Thiem won just seven points in the third set before ending a miserable 30 minutes with another unforced error into the net.
He began to look weary in the fourth set – particularly mentally – and Nadal smelt blood.
The Spaniard moved into a 3-0 lead, after seeing off break points in his two service games, before breaking again for a 5-1 lead.
Although Thiem saved one match point, he could not prevent the inevitable and batted a Nadal serve long to spark jubilant celebrations from the Spaniard.