Alcaraz, 19 - who stunned both Rafael Nadal and Novak Djokovic on his way to the final - won 6-3 6-1 against Zverev in little over an hour.
Zverev, the defending champion who also won in Madrid in 2018, could not find a way to break down his opponent and was broken decisively in the sixth game of the opening set and four times in the second.
On court after the match, Zverev told Alcaraz: "I want to congratulate Carlitos. Right now you are the best player in the world.
"It is great for tennis that we have such a new superstar that is going to win so many grand slams, that is going to be world number one and I think is going to win this tournament many more times."
Alcaraz became the first man to beat countryman Nadal and Djokovic in the same clay-court tournament with a thrilling 6-7 (7) 7-5 7-6 (7) win over the Serbian world number one on Saturday.
The Spaniard's triumph in Madrid was his fourth ATP Tour title of the year - more than any other player - and his seventh successive victory over a top-10 opponent.
Ranked world number 120 just 12 months ago, Alcaraz is the second-youngest player to win two ATP Masters 1000 titles following his victory in Miami in March. Nadal won in Monte Carlo and Rome at the age of 18 in 2005.
Alcaraz, who has also won in Umag, Rio de Janeiro and Barcelona in the past year, will climb to number six in the ATP rankings on Monday.