André Greipel won the final-day field sprint for Lotto-Soudal but it was Team Sky's Thomas who took home the leader's yellow jersey after a dominant performance in Portugal.
The 28-year-old laid the foundations for his victory with a solo win on stage 2 of the race to Monchique, before extending his advantage with a solid performance in the race's individual time trial 24 hours later.
A dogged ride on the following day's stage to Malhão – won by teammate Richie Porte – all but sealed the overall title for the Welshman.
"Richie was the leader coming into the race but I took my chance on the second day and I happened to get the jersey. It's gone amazingly well.
"For the team – two stages, the overall and the mountains jersey – it's been a really good, enjoyable week," Thomas said on his team's website.
Thomas will head to Paris-Nice at the start of March, a race he led last year but eventually crashed out of with two days remaining. He will race alongside Porte and Bradley Wiggins in the French race, before focusing on the Spring Classics, where he will line-up as one of Team Sky's most influential riders.
"I'm just happy to get the win," he said. "We've got a big month ahead with Paris-Nice and the Classics. The form seems to be building nicely so I'm looking forward to the next few weeks.
"You look at the previous [Volta ao Algarve] winners and there are a lot of strong guys there. There's a lot of strong teams here too. I don't get to win very often so it's really nice," he added.
Thomas’ overall success at the Volta ao Algarve comes on the same day as Team Sky's Chris Froome clinched the title at the Vuelta a Andalucia.