Rob Howley capitalised on one of the biggest blunders in European Cup history to give Wasps their first European title at a sun-baked Twickenham.
The Wasps scrum-half and former Wales captain pounced in the dying seconds of a pulsating final to destroy Toulouse's bid for a record third European crown.
With the game tied at 20-20 and seemingly heading for extra-time, Toulouse full-back Clement Poitrenaud watched Howley's speculative kick drift towards the touchline.
But he then inexplicably shouldered arms in cricketer's fashion, and Howley, whose Wasps place is under threat from potential new signing Matt Dawson next season, touched down.
Full-back Mark Van Gisbergen took his match haul to 17 points by landing the touchline conversion off the crossbar, and Toulouse were sunk.
Earlier in the action, Wasps centre Stuart Abbott scored a try and New Zealander Van Gisbergen, who qualifies for England on residency grounds in September next year claimed a touchdown and booted two penalties and three conversions.
Toulouse, European champions in 1996 and 2003, fought back from 20-11 adrift to draw level through three penalties from substitute half-back Jean-Baptiste Elissalde, but Poitrenaud then spectacularly let them down.
Wasps become the fourth English champions after Bath, Northampton and Leicester.
And their victory also gives England seven European Cup places next term, so fourth-placed Premiership finishers Gloucester join Wasps, Bath, Northampton, Harlequins and Newcastle in the competition.
Skipper Lawrence Dallaglio, who was sin-binned in the second period, lifted the European Cup just six months after playing a key role in England's unforgettable World Cup triumph.
French aristocrats Toulouse were inconsolable at the final whistle, especially Poitrenaud, but the force, ultimately, was with Wasps.
Twickenham welcomed a 70,000-plus crowd for its second European Cup final after playing host to Northampton's 9-8 victory over Munster four years ago.
Wasps established initial territorial control, but they were unable to make it count, and Toulouse grabbed a fifth-minute lead through a penalty from fly-half Yann Delaigue.
Wasps, missing injured former All Blacks prop Craig Dowd, conceded another penalty six minutes later, and Delaigue bisected the posts for a 6-0 advantage.
It represented a perfect start for the French club, who threw down the gauntlet to Wasps in no uncertain terms, and it took Dallaglio's men 15 minutes before they opened their account through a Van Gisbergen penalty.
And they continued their reply in devastating fashion with a stunning try that left Toulouse completely spellbound.
Immense lock Simon Shaw linked brilliantly with centre Fraser Waters, both of them punching holes deep into Toulouse's defence, and possession was expertly worked wide before Abbott galloped through to score.
Van Gisbergen converted, and Wasps had overcome their early nerves, leading 10-6 entering the second quarter.
Toulouse were desperately unlucky not to score on 27 minutes when scrum-half Frederic Michalak's quick kick agonisingly eluded wing Cedric Heymans, but there was no excusing Delaigue's resulting penalty miss from just 20 metres out.
Van Gisbergen showed Delaigue exactly how it should be done when he found the target from 45 metres, which extended Wasps' lead to 13-6.
Toulouse hit back with a mesmerising passage of play that began under defensive panic inside their own 22, but ended with Heymans romping into Wasps' 22 before Wasps' defensive rearguard hauled him down.
It underlined just what Toulouse were capable of, and not even Wasps could live with such magical rugby.
Toulouse failed to score from the initial counter-attack, but they kept the momentum going and worked enough space out wide for Delaigue to touch down.
He missed the conversion that would have levelled the scores, yet Wasps had been served an emphatic reminder as they trooped off at half-time 13-11 ahead.
Toulouse, seemingly reflecting on their attacking finery, were then undone within four minutes of the restart.
Fly-half Alex King ran brilliantly into the heart of Toulouse territory, and Van Gisbergen had enough pace and awareness to appear on King's shoulder and claim a superb touchdown that the full-back converted for a 20-11 advantage.
The game was now about what Toulouse were made off, but after handing Heymans a penalty strike instead of Delaigue, the wing sent it wide.
Toulouse made a double substitution after 52 minutes, replacing Irish international Trevor Brennan with David Gerard in the second-row, and perhaps more significantly, sending on French RBS 6 Nations star Elissalde for Delaigue.
Elissalde's arrival meant that Michalak moved to his international position of fly-half.
And Wasps were given plenty to think about Wasps when Dallaglio was sin-binned for killing possession, handing Elissalde an immediate penalty chance that he duly accepted.
Wasps' advantage had been cut to 20-14 with their talisman number eight off the pitch, meaning the game remained firmly in the balance.
Two more Elissalde strikes set up extra-time, but then came Poitrenaud's unforgettable error to leave Wasps in dreamland.
Henry Slade admits he could not watch his England team-mates celebrate their RBS 6 Nations Grand Slam triumph after suffering injury heartbreak, but now has the Red Rose's summer tour to Australia in his sights.