Murray and Hingis beat defending champions Watson and Kontinen 6-4 6-4 as Murray sealed his second grand slam title in mixed, 10 years after winning his first here with Jelena Jankovic.
It is also 20 years since Hingis edged past Jana Novotna to win her singles title on Centre Court, and the Swiss now has six major mixed doubles triumphs to add to her 12 in women's doubles and five in singles.
Murray and Brazilian partner Bruno Soares lost in the second round of the men's doubles in the opening week, but the Scot has since forged a strong mixed partnership with Hingis.
For Guernsey-born Watson, meanwhile, this was another strong run with Finland's Kontinen, backing up her progress to the third round of the singles last week where she was beaten in three sets by Victoria Azarenka.
Murray and Hingis share the winners' cheque of £100,000 while Watson and Kontinen split the £50,000 runners-up prize.
After Andy Murray and Johanna Konta's exits from the singles, Watson and Jamie Murray were able to deliver two British finalists on Centre Court, even if not the pair that many home fans had wished for.
The crowd's support was certainly evenly spread, to the extent that one particularly generous spectator felt compelled to shout out, "Come on, all of you", much to the amusement of the masses.
Murray was the star of the show and he earned the first break with a dart across the net, but a poor game from Hingis allowed Watson and Kontinen instantly to hit back.
Another Murray intervention sealed a second break for 4-3 and this time they served out when the Scot hammered away a smash.
The second set was close until the seventh game when Watson's serve came under pressure. A stinging Hingis return set up two break points, and she and Murray converted the second when Watson chipped a short ball into the net.
Serving for the match, Murray and Hingis faced two break points after a pair of punching Watson returns and then a third as Kontinen fired away a pass.
But each was saved and when Watson flashed wide a smash, all that was left was for a booming Murray serve to finish off.
Murray said the atmosphere was "a bit strange", given the presence of the two British players.
He added: "It's a great success for British tennis to have two in the final. I had a great week, we played a lot of amazing tennis, especially in the final.
"I knew we would have to play a good match if we wanted to have a chance to win and we were able to do that."
Hingis told the BBC: "I'm really happy I contacted Jamie before Wimbledon started. I'm really happy how we played.
"You talked about how one British player was going to win Wimbledon this year and I hoped it was going to be mine."