It was the third Olympic gold for the diminutive 28-year-old Ammann, dubbed Harry Potter because of his owlish looks, who won both individual titles at the 2002 Games but flopped in 2006.
"I have no words for this. It's crazy. I tried to hard to focus," he said. "It's my third gold medal. It's insane."
Ammann was narrowly ahead after the first round and put in a massive 108m jump, the longest of the day, to win with 276.5 points. Poland's Adam Malysz, seeking his first gold at the age of 32, came second with 269.5.
Austrian Gregor Schlierenzauer, tipped to dominate the individual hills, slipped on landing after his first jump. He recovered with a second-round jump of 106.5m, the second longest of the day, and came third with 268 points.
Amman knew he had won as soon as he made his second landing and clenched his fists while sliding to a halt. When the results were confirmed he embraced his coach and jumped around on the snow, his skis still over his shoulder.
The disappointment of the day was the highly-fancied Austrian team, which has four of the top five jumpers in the world yet could only finish third, eighth, 11th and joint 19th.
Before the Games started there had been talk in jumping circles that Schlierenzauer's performances were slipping and his touch betrayed him on landing.
Schlierenzauer, however, is best known for his ability to glide through the air and should be strong contender in next week's large hill competition.
Place of birth: Unterwasser, Switzerland
Previous Olympics results: Won gold in the normal and long hill at the 2002 Winter Olympics in Salt Lake City
Other career achievements:
Gold medallist, 2007 World Championships, LH Individual
Silver medallist, 2007 World Championships, NH Individual
Bronze medallist, 2009, World Championships, NH Individual
Second place individual overall, 2008/09 World Cup
Third place individual overall, 2006/07 World Cup
Normal hill favourite Ammann celebrated his third Olympic gold with a comfortable victory in the first medal event of the 2010 Vancouver Winter Games.
The 2009/10 World Cup leader and snowboarding fan has now won more Winter Olympic gold medals than any other Swiss male athlete.
Dubbed ‘Harry Potter’ at the 2002 Salt Lake Games due to his likeness to the fictitious boy wizard, he first began ski jumping at the age of 11 because there was little else to do in his small home village.