Set 211 to win and with Warwickshire only able to draw with Hampshire, they reached their target with more than five overs of the final day left.
Stephen Moore (71) and Paul Horton (54) got the run chase off to a flying start with a stand of 131 before Steven Croft and Karl Brown saw them home.
Peter Trego (120) had threatened to derail Lancashire as Somerset made 310.
Lancashire did tie for the County Championship with Surrey in 1950, but this was their first outright title win in 77 years.
But, at one stage, it looked as though they would be denied the win they needed to keep their hopes alive as Trego led an impressive Somerset recovery from 130-7.
He was ably supported by Alfonso Thomas (18) in a stand of 75 for the eighth wicket, before going to his first Championship century of the summer in sharing 95 after lunch for the ninth wicket with former Lancashire man Murali Kartik (65 not out).
Lancashire have finished second eight times in the County Championship since 1934
But, when Gary Keedy ran out Gemaal Hussain, Somerset were all out and Lancashire knew that they needed to score at around six runs an over in a session and a bit to win the title.
The opening partnership spanned only 17 overs and, when Moore was second out, Lancashire still needed 76 in 17 overs.
But Blackpool-born Croft (40 not out) and Bolton-born Brown (33 not out) made light work of that task.
And Croft had the honour of hitting the winning runs to spark understandably jubilant scenes as Lancashire, under the captaincy of a Yorkshireman, Glen Chapple, claimed their eighth County Championship title and one that brought them great pride.
It was a third County Championship triumph for their coach Peter Moores, who had twice pipped Lancashire before with Sussex, in 2003 and 2006.
But the biggest irony of Lancashire winning the title this year of all years was that it came in a season when they did not play a single match at Old Trafford - where the title was so dramatically won by Nottinghamshire in the final moments last September.
Due to the work on their famous old ground, apart from playing at the other 'out' grounds, Blackpool and Southport, they switched their other six matches to Aigburth.
But, after years of notoriously bad luck with the weather, fate played its part in deciding that the outcome of the Liverpool Victoria Championship would be that, with Liverpool as their base, Lancashire were victorious.
Lancashire batsman Steven Croft:
"We put in the hard yards last winter and it's turned into a great season with a real team effort from 1 to 11.
"Apparently, Michael Carberry dropped Shiv Chanderpaul, who went on to make a century and we were cursing him. But he more than made up for it.
"When we heard the result come through from The Rose Bowl, our supporters let us know.
"And, from then on, it was just a case of keeping a cool head."
Lancashire beat Somerset by eight wickets to claim their first outright County Championship title since 1934.