Al Ain reached the final after the United Arab Emirates club proved to be the surprise of the short tournament.
"We're very happy, these players deserve this", said Real coach Santiago Solari after winning his first piece of silverware since replacing Julen Lopetegui in the dugout in October.
Real have won the last three editions of the tournament, also lifting the trophy in 2014, and moved ahead of Barcelona as the team to have won it the most times.
Recently crowned Ballon d'Or victor Modric opened the scoring in the 14th minute, taking one touch before thumping the ball into the bottom corner from outside the box to break the deadlock after Al Ain had missed two early chances to take a shock lead. Now they have added a third consecutive Club World Cup.
It was his first goal for Madrid, as he continues to impress playing for the injured Casemiro in recent weeks.
But Al Ain had missed two early chances to take a shock lead.
U.S. Index Futures Extend Gains on Further Talks With China
Declining issues outnumbered advancing ones on the NYSE by a 1.14-to-1 ratio; on Nasdaq, a 1.43-to-1 ratio favored decliners. The two-day Fed meeting , starting today, has been expected to deliver another interest-rate increase, Reuters reported.
Neat build-up play from Karim Benzema set up Modric and the Ballon d'Or victor curled home a beauty from 25 yards, Caio then seeing a rapid reply ruled out for offside. Benzema - who has six league goals this season - did set up Modric's opener, yet he is ultimately in the Madrid team to score goals, not make them.
Marcos Llorente then produced a fine finish of his own on the hour mark for his first ever Real Madrid goal, firing in a low strike after the ball came to him following a Toni Kroos corner.
Al Ain did pull one back with 5 minutes to go through Tsukasa Shiotani, before putting one through their own net in the first minute of stoppage time.
It has three more world titles than the next best, AC Milan.
Ramos powered home a Modric corner to make certain of Madrid's victory, celebrating the goal with unused substitute Isco, although Al Ain scored a deserved consolation through Shiotani with four minutes left.