Cancellara was in a class of his own around central London
The Swiss, 26, was the only man inside nine minutes, clocking eight minutes and 50 seconds to beat Andreas Kloden.
George Hincapie was third, a fraction of a second ahead of Bradley Wiggins, who was the first Briton to finish.
David Millar finished just outside the top 10 on a scenic 7.9km (five mile) course from Whitehall to The Mall.
Every rider got a huge ovation from up to a million spectators lining the route.
But the loudest cheers were reserved for the British Tour quintet of Wiggins, Millar, Mark Cavendish, Gerraint Thomas and Charlie Wegelius.
However, none of them could match the extraordinary pace of Cancellara, who finished 13 seconds clear of Kloden, one of the overall classification favourites.
"I had more pressure than when I won the Tour prologue in Liege in 2004 ahead of Lance Armstrong," said Cancellara.
The crowd really helped me, I was going out there to do everyone proud
Bradley Wiggins
"This was a great day for cycling. It's just a shame I'm still waiting for my luggage which I lost at Heathrow Airport. But I have the (overall leader's) yellow jersey, it's what matters today."
Pre-race favourite Alexandre Vinokourov finished seventh - just behind Russian pair Vladimir Gusev and Vladimir Karpets - to put himself in a good position.
And contenders Alejandro Valverde and Levi Leipheimer completed the course safely.
That could not be said of Australian Stuart O'Grady, who provided one of the most spectacular images of the day when he crashed and had to change bike before finishing well down the order.
Wiggins was delighted with the support he received as he produced what he called a "perfect" ride.
"I feel 100% satisfaction," he said. "I know I did the best I could do. I am really pleased with my ride. I didn't hit the brakes once on the way round.
"I am really happy to be on the same level as guys like George Hincapie but Cancellara was just on another level. When you lose by 25 seconds, what can you do? I think I have done myself proud really.
"The crowd really helped me, I was going out there to do everyone proud. It was fantastic. What an experience for someone coming from London. It was amazing.
"I never expected this magnitude of people so God knows what the Olympics will be like. This has been such an occasion."
Sunday's first full stage of Le Tour takes the riders from Greenwich to Canterbury, before the race crosses the channel and heads back towards France.
Top 10 result and overall classification after prologue (London, 7.9km):
1. Fabian Cancellara (Switzerland / Team CSC) 8 min 50 sec
2. Andreas Kloeden (Germany / Astana ) +13 sec
3. George Hincapie (U.S. / Discovery Channel ) +23
4. Bradley Wiggins (Britain / Cofidis ) +23
5. Vladimir Gusev (Russia / Discovery Channel ) +25
6. Vladimir Karpets (Russia / Caisse d'Epargne ) +26
7. Alexandre Vinokourov (Kazakhstan / Astana ) +30
8. Thomas Dekker (Netherlands / Rabobank ) +31
9. Manuel Quinziato (Italy / Liquigas ) +32
10. Benoit Vaugrenard (France / Francaise des Jeux) +32
At least half a million onlookers turned out to line the route as the Tour de France Prologue closed the streets of Central London for a day. Setting off at one minute intervals the 180 plus riders took less than ten minutes to speed past some of London's most memorable landmarks. With the eventual winner World time-trial champion Fabian Cancellara completing the 7.9 kilometre individual time trial in 8 minutes 50 seconds.

Fabian Cancellara
The Tour had to compete with more familiar sporting events, the British Grand Prix, the closing stages of Wimbledon and with the Live Earth concerts for the heart's of the British public. However some say as many as a million turned out for the Gallic extravaganza; the party atmosphere aided by a turn in the weather, the sun coming out for the first time all summer.

Run on the second anniversary of the 2005 terrorist attacks and at a time  of heightened security, policing was successfully discrete the most visible police presence, by way of their novelty being, 45 members of the Gendarme Nationale.

Coming to England for the first time since 1994 fans new and old had the course of the day and the three hours of the trials to familiarise themselves with the French institution. The initial good natured cheering on of every rider, growing into real excitement as the shape of the race emerged. At the end of the day the standings were:




Rank

Name

Country

Team

Time



'''1'''

'''Fabian Cancellara'''

'''Switzerland'''

'''Team CSC'''

    '''8'50"'''



2 

Andréas Klöden

Germany

Astana Team

 13"



3 

George Hincapie

USA

Discovery Channel Pro Cycling Team

 23"



4 

Bradley Wiggins

Great Britain

Cofidis

 23"



5 

Vladimir Gusev

Russia

Discovery Channel Pro Cycling Team

 25"



6 

Vladimir Karpets

Russia

Caisse d'Epargne

 26" 



7 

Alexandre Vinokourov

Kazakhstan

Astana Team

 30"



8 

Thomas Dekker

Netherlands

Rabobank

 31"



9

Manuel Quinziato

Italy

Liquigas

 32"



10 

Benoît Vaugrenard

France

Française des Jeux

 32"