City's Bernardo Silva and Mateo Kovacic both misfired in the shootout to put Madrid in the driving seat
An inspired Halep took full advantage of an error-strewn display by seven-times champion Williams to become the first Romanian to win the Wimbledon title.
The 27-year-old Halep broke serve in the opening game and raced into a 4-0 lead. She remained rock solid throughout and Williams simply could not respond.
It is the second year running that Williams arrived in the final seeking to match Margaret Court's record 24 singles majors. Last year she failed to get a set against Angelique Kerber. She then went on to lose the US Open final.