Cotto scored four knockdowns -- three in the first round -- in a stunningly dominant performance. After he dropped Martinez in the ninth round, Martinez was still on his stool when trainer Pablo Sarmiento would not let him continue, and referee Michael Griffin stopped the bout six seconds into the 10th round.
The largely Puerto Rican crowd of 21,090, which was there mostly for Cotto on the eve of the annual Puerto Rican Day parade in New York, erupted.
With the overwhelming victory, Cotto made the Puerto Rican history that was his motivation for taking the fight -- becoming the first boxer from the island to win world titles in four weight classes.
Puerto Rican greats such as Wilfred Benitez, Wilfredo Gomez and Felix Trinidad -- all International Boxing Hall of Famers -- each won world titles in three weight classes and became legends.
Now Cotto is one better than them.
"Happiest day of my life," Cotto said. "This is the biggest achievement of my professional career."
Cotto, who has won world titles at middleweight, junior middleweight, welterweight and junior welterweight, won every round and was ahead 90-77 on all three scorecards when the fight was stopped.
"I'm proud of Miguel. He worked so hard," said Hall of Fame trainer Freddie Roach, in only his second fight with Cotto. "He deserved this historic victory."
The fight was essentially over in the first round when Cotto knocked Martinez down three times and had him badly hurt. Griffin showed great restraint in not stopping the fight.
First Cotto dropped Martinez with a left hook, his bread-and-butter punch. Moments later, Cotto knocked him down again with a right hand. And then he was down again on a body shot.
"I got hit with the punch and I was cold and I never recovered after that," said Martinez, who did not make any excuses about his twice-surgically repaired right knee affecting the fight. "I tried to do my best and I want to apologize to the Argentine fans and and I want to thank all of the Puerto Rican fans for coming out. You've got to know when to win and you've got to know when to lose, and I give all congratulations to Miguel Cotto."
"My maturity as a professional fighter showed in the ring tonight," Cotto said. "I told myself not to go wild. [Martinez] keeps his right hand down, which makes it easy to land a left hook. My left hook was the punch that beat him tonight.
"I was boxing on angles, controlling him with my jab while backing him up. This is everything we did at Wild Card."
The knockdowns put Martinez (51-3-2, 28 KOs) in an inescapable hole and badly messed him up.
"I never went wild even after I knocked him down three times. This was a 12-round fight, not one-round fight. I was following Freddie's game plan," Cotto said.
Said Lou DiBella, Martinez's promoter: "He said that the first punch that knocked him down, he never recovered from the punch. He had no excuses. Not a knee, not a bad hand. Nothing other than he got caught and didn't recover.
"He would have kept going but the corner stopped it and did the right thing. At that point [after the ninth round], it was just bravery keeping him up."
The 33-year-old Cotto (39-4, 32 KOs), 8-1 at the Garden, stayed poised and kept doing his thing as he was picking Martinez apart and hurting him.
In the fourth round, the crowd tried to lift Martinez with chants of "Martinez! Martinez! Martinez!" But they were quickly drowned out by chants of "Cotto! Cotto! Cotto!"
And then Cotto rocked Martinez with another of the many left hooks he landed. Cotto pressured Martinez throughout the fight and backed him up constantly. At the end of the seventh round, Roach told him how well he was doing.
"Miguel, you are giving Martinez a boxing lesson," Roach said.
Cotto looked happy and in the zone as he stayed on his toes and popped Martinez repeatedly with jabs and hooks in the eighth round.
"He was picture-perfect tonight," Roach said. "We won every round. I'll say this about Sergio. He got up three times in the first round. He's got a lot of balls. Miguel didn't get hit with nothing. His defense was beautiful. When he came back to the corner, every round was the same. I kept saying, 'That was your best round yet.'"
Cotto had Martinez in trouble again in the ninth round courtesy of a pair of body shots and two more to the head, and it looked like just a matter of time until a stoppage.
Martinez, his right eye swelling, got nailed again late in the ninth and touched his glove to the canvas for the fourth knockdown.
After the round, Sarmiento told Martinez, "Your knees are not working, champion. They are not working. It is my responsibility, champion. They are not working."
And, like that, he stopped the fight even as Martinez was begging for him to give him one more round.
"He was unstable and not responding; that's why I stopped the fight," Sarmiento said. "He was hurt badly in the first round and he never got better. His knee was hurting bad."
The loss, in Martinez's seventh title defense, could bring an end to his career. Martinez was fighting for the first time in 14 months, had right knee surgery after his two previous fights and broke his left hand in each bout.
"Cotto looked unbelievable," DiBella said. "He fought a brilliant fight after he hurt him, too. He was controlled, he didn't do anything stupid. He laid down a lot of punishment. I never thought he'd look like that at middleweight. That was the best performance of his I have ever seen. He deserves all props. Freddie said he didn't want to hear any excuses, and he won't hear any excuses."
At 39, Martinez could be done.
"It's up to him," DiBella said. "I wouldn't push him either way. I don't think it's a decision to be made tonight."
Martinez was taken to a hospital for precautionary reasons after the fight. DiBella and Martinez are close, and the promoter got choked up when asked how it felt to see his fighter lose so badly.
"It hurt," DiBella said. "He kept apologizing to me. He has nothing to be sorry about. It's been a great ride. He's a brave guy. Most guys wouldn't have kept going in that fight."
While Martinez might be finished -- although he has one fight remaining on his HBO contract -- Cotto looked reborn. He lost back-to-back junior middleweight title fights to Floyd Mayweather Jr. and Austin Trout in 2012, hooked up with Roach, and bounced back with a third-round knockout of Delvin Rodriguez in October. But Martinez, a stalwart top-five pound-for-pound fighter for years, is no Rodriguez.
"I thought he was absolutely sensational," Top Rank's Bob Arum, Cotto's promoter, said. "I was saying to myself, 'What a waste that he didn't get to Freddie earlier.' And the way he did it, he fought like a perfect fight. He just blew him out.
"I think Sergio probably was better a number of years ago. You can't take a layoff like that and fight a guy with the skill and the stamina that Cotto has. No way you can do that."
Arum said Cotto's return is being planned for either Dec. 6 or 13 at Madison Square Garden, depending on the arena's schedule.
Arum said he would soon talk to one-time rival promoter -- and now reconciled pal -- Oscar De La Hoya of Golden Boy about a showdown with former junior middleweight titlist Canelo Alvarez, which would be a megafight between the most popular active Puerto Rican and Mexican fighters, and that is one of boxing's classic national rivalries.
"Canelo is a possibility if he gets past [Erislandy] Lara [in July]," Arum said. "Next? I don't know. But after that, next year, is certainly a possibility."
Arum also said even middleweight titlist Gennady Golovkin -- who defends his belt July 26 at MSG against former titlist Daniel Geale -- might be an option.
After Cotto's historic and unexpected domination of a great champion doesn't it seem like anything is possible?