Victory sees the Serb draw level with Rafael Nadal on 27 ATP World Tour Masters 1000 crowns and extends the 'Big Four' dominance at this level, with Djokovic, Nadal, Roger Federer and Andy Murray having won 49 of the past 53 Masters 1000 tournaments.
The 28-year-old Djokovic has a 46-6 tournament record at the Indian Wells Tennis Garden, winning the title in 2008, 2011 and then completing the three-peat between 2014-16. He also reached the final in 2007, finishing runner-up to Nadal.
"It has obviously been a great couple of weeks," said Djokovic. "To win this tournament five times is a fantastic achievement for my team and I.
"We don't take anything for granted, especially because this tournament has been, for many, many players, a favorite tournament. All the top players each year competing and trying to win it.
"Players are very welcome. The spectators are sharing their passion and love for the sport with us, and in this kind of environment you are obviously inspired to play your best."
Since battling past young American talent Bjorn Fratangelo in three sets in his opening second-round match, Djokovic has gone from strength to strength, not dropping a set as he raced to his 62nd tour-level title in the desert.
Raonic had come into the final having only lost serve four times in the tournament, but Djokovic swiftly announced his intent, breaking the Canadian twice as he surged into a 4-0 lead. Raonic stemmed the flow, but could not find a way back into the set as Djokovic wrapped up the opener in 43 minutes, having won more than half the points (52 per cent) on his opponent's serve.
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Raonic left the court for treatment after the first set, but could do nothing to halt Djokovic's momentum in the second set. Indeed, the Canadian was punished for not winning any of his 14 second serve points as Djokovic broke three times to surge to victory in 88 minutes, having lost only three points on serve in the second set.
Djokovic captured his third title of the season, having opened his season with victory in Doha (d. Nadal) before lifting his 11th Grand Slam trophy at the Australian Open (d. Murray).
The Serb earns $1,028,300 in prize money and receives 1000 Emirates ATP Rankings points.
The 25-year-old Raonic had made an impressive return to action after being sidelined with an adductor injury through February. The right-hander was contesting his third ATP World Tour Masters 1000 final after becoming the first player outside the Top 10 to reach the Indian Wells final since John Isner in 2012.
Speaking on the injury, Raonic said, "I'm not sure. I have to see the medical staff here and discuss with my own. I just hope it has nothing to do with the previous issue I had.
"I don't think it affected my effort. I thought he played much better than I did. I struggled again, just like last time, to start the match well, and then he's the best player in the world at this moment and a good step ahead of everybody. He took the most advantage of that."
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After runner-up showings in Montreal in 2013 and Paris in 2014, Raonic was bidding to become the first player born in the 1990s to win a Masters 1000 trophy.
Raonic has a 14-2 record on the season, highlighted by winning his eighth ATP World Tour title in Brisbane (d. Federer) and reaching his second Grand Slam semifinal at the Australian Open (l. to Murray).
After suffering his sixth loss in six meetings with Djokovic, Raonic said, "I need to work harder. I need to execute better. My way that I go about things, I think I'm on the right track. I think it's about putting the things together, being effective, which today I wasn't able to do.
"I think I have it within me, but obviously I need to reach a lot deeper to find that execution.
"There are a lot of positives to take away. Right now it's very disappointing, but at the end of the day, until two weeks ago I didn't do any side-to-side movement and I didn't play any points.
"To be here, playing in one of the 12 most important tournaments in our year, in the final, is great progress forward. I look forward to keeping that going forward and trying to be healthy and trying to get better every day."
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