Ammann made the longest jumps in both rounds for a combined points total of 283.6. He won the normal hill last week and also both hills in the 2002 Games.
"I was so nervous up there. This is all very nerve-wracking. I always have this magical force to jump far here and that is amazing," Ammann said.
Poland's Adam Malysz took the silver medal and Austria's Gregor Schlierenzauer won bronze. The same three jumpers finished in the same order on the normal hill.
The Swiss jumper, unaffected by a row with Austria over the legality of his boot bindings, effectively secured his win with a huge first-round leap of 144 metres, seven metres longer than that of Malysz.
In the second round he notched up a more modest 138 metres but clearly knew it was more than enough. As he slowed to a halt he punched the air and pretended to fire a pistol before blowing kisses to the crowd.
The previous individual ski jumping medal record was held by Finland's Matti Nykanen, who won the large hill in 1984 and 1988, the normal hill in 1988 and was also part of the winning four-man team in 1988.
The four golds make Ammann the most successful Swiss athlete in Winter Games history.
His determination pulled him through dark times after the 2006 Games, when he arrived as the defending champion in both the large and normal hills and flopped hopelessly.
He blamed equipment changes and new rules stipulating a minimum body mass index for jumpers and went away to rebuild his technique and work on his concentration and willpower.
"This is what probably makes the difference between me and the other jumpers. I could come here and feel so confident on the hill," Ammann said after his fourth win.
The top Austrians paid him tribute after the final jump.
"Simon is amazing," conceded pre-Games favourite Schlierenzauer.
"He's jumping almost perfectly so it's very difficult for competitors to beat him," added Wolfgang Loitzl.
Earlier in the day, the Austrians announced they would not carry out a threat to protest about Ammann's boot bindings, which they initially said gave him an unfair advantage as it made him more aerodynamic through the air. FIS ruled on Friday that there was nothing wrong with the bindings.
Place of birth: Unterwasser, Switzerland
Residence: Schindellegi, Switzerland
Previous major Olympics results: Gold medallist, 2010 Winter Olympics, NH individual 2x Gold medallist, 2002 Winter Olympics, NH and LH individual
Other career achievements:
Gold medallist, 2007 World Championships, LH Individual
Silver medallist, 2007 World Championships, NH Individual
Bronze medallist, 2009, World Championships, NH Individual
Runner-up, 2008/09 World Cup, Individual overall
Third place, 2006/07 World Cup, Individual overall
Ski jumping favourite Ammann celebrated his fourth Olympic gold and second of the Vancouver Games with victory in the large hill event. He easily won the normal hill last week.
His victory makes him the first man to win four individual ski jumping golds and also the most successful Swiss Winter Olympian, surpassing Vreni Schneider's three gold medals.
In the run-up to the LH event Austria had threatened a protest over Ammann's bindings, which they said gave him an illegal aerodynamic advantage. FIS examined the bindings and after confirming they were legal, Austria dropped the protest.
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.
The snowboarding fan currently leads the 2009/10 World Cup.