Liverpool attacker Luis Suarez was also on target as Uruguay took a first continental crown since 1995 and broke their Copa title tie of 14 which they held with Argentina.
Suarez opened the scoring in the 12th minute when his drive took a deflection off Dario Veron and left goalkeeper Justo Villar wrong-footed.
Former Manchester United striker Forlan added the second three minutes from the interval when Egidio Arevalo cleverly intercepted the ball to release the Atletico Madrid attacker who confidently buried a left-footed strike.
It was Forlan’s 30th international goal, but first in 13 matches as Uruguay, who knocked out hosts Argentina in the quarter-finals, were in cruise control at River Plate’s famous Estadio Monumental.
Uruguay were well worth their lead having dominated the first half while Paraguay, who had reached the final without winning a game, were desperately short of ideas and inspiration.
They had been fortunate not to have been a goal down as early as the second minute, needing Villar to pull off a sensational, point-blank save to keep out a bullet header from Diego Lugano.
Paraguay, the champions in 1953 and 1979, had defeated Brazil and Venezuela in penalty shoot-outs in both the quarter-finals and semi-finals after the games ended 0-0 in extra-time.
But they came close to pulling a goal back in the 54th minute when Nelson Valdez crashed a right-foot volley off the crossbar with Uruguay goalkeeper Fernando Muslera getting a slight touch to deflect the ball towards the woodwork.
Just moments earlier, Suarez had muscled his way down the left, but his cutback for Forlan dropped just inches behind the Atletico Madrid man as he closed down on goal.
Paraguay again looked dangerous when Ivan Piris charged down the flank before crossing to Christian Riveros whose flick was saved by Muslera.
Uruguay remained in a positive frame of mind, bringing on prolific Napoli striker Edinson Cavani for Alvaro Pereira after 65 minutes.
Cavani then teed-up Sebastian Eguren 10 minutes later but Villar pulled off a one-handed save despite being off-balance.
Forlan then hit his 31st international goal in the last minute after being set-up by Cavani and Suarez.
SoccerPunter’s comments:
Uruguay did very well in this tournament although they do not have many star players like Brazil or Argentina. But they count their success on teamwork and co-ordination. Credits to their two lethal strikers in Diego Forlan and Luis Suarez.
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