The walkover will see Murray, 29, move to the top of the rankings for the first time in his career after replacing long-time incumbent Novak Djokovic.
The Scot’s climb to the ATP rankings’ summit caps a remarkable year which has seen him win a second Wimbledon crown and mount a successful defence of his Olympic title in Rio.
“I think that’s the most satisfying thing, really. It’s been such a difficult thing to do during my career because of how good the guys around me have been, the guys ahead of me,” said Murray.
“Obviously it’s unfortunate the way that it happened today. I would have liked to have done it on the court, but it’s been many years of work to get here.
“I never thought I’d be No. 1 in the world and never imagined that was something that was going to happen.”
Murray had needed to reach the final to supplant Djokovic at the top following the Serb’s defeat to Marin Cilic in the last eight.
But he didn’t need to hit a single ball as Raonic announced his withdrawal in a hastily-arranged press conference just an hour before the scheduled 1530 GMT start.
The Canadian said he had suffered a muscle tear in his right leg in his previous match, sending Murray through to face John Isner in Sunday’s final.
“This morning I had trouble waking up and getting out of bed,” said Raonic, who hurt himself in Friday’s quarter-final win over Jo-Wilfried Tsonga.
“I had some tests and an MRI half an hour ago and they found that I have a tear, Grade 1 tear in the right quad.”
Murray will be confirmed as the new number one — the 26th different player in history to hold top spot — when the latest rankings are released on Monday.
He is the oldest first-time number one since 30-year-old John Newcombe of Australia in June 1974.
Djokovic, whose 122-week reign at the top is set to come to an end, praised Murray’s remarkable rise which coincided with a tumultuous second half of the year for the Serb.
“He’s definitely a player who deserves that. Undoubtedly much respect for what he has done,” said Djokovic.
“To see how he has raised his level in the last 12 months is quite extraordinary.”
Murray will meet Isner as he targets a maiden Paris Masters title after the big-serving American toppled Cilic 6-4, 6-3 in the first semi-final.
Isner, who also reached the last four in 2011, broke the ninth seed at 4-all before serving out for the first set.
Cilic sealed his place at the Tour Finals in London this week and then snapped a 14-match losing run against Djokovic, but the Croat couldn’t maintain that level against Isner.
The American seized control again at 3-3 in the second set and inflicted his first defeat on Cilic in seven attempts with another break of serve.
Isner will bid for his first Masters 1000 title after reaching the final at Indian Wells in 2012 and Cincinnati in 2013.
“It’s going to be a huge challenge for me,” said Isner. “Andy, of course, is one of the all-time greats in my opinion.
“I have never beaten him before. He’s had my number. But also I had never beaten Cilic before coming into this match.
“If I want to have any chance, I have to play extremely well.”
Meanwhile, Raonic’s injury throws his participation at the prestigious November 13-20 Tour Finals into doubt, although he refused to rule out taking part just yet.
“I still have the possibility of making it, but I was told five to ten days. So I’m on the borderline for that,” he said.
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