Formula One Stats | Rosberg wins British GP
It was the Mercedes team's first victory in Britain since Stirling Moss won in 1955 and Rosberg's second in three races and third of his career and came just three days after he celebrated his 28th birthday.
But the race was overshadowed by a dangerous spate of Pirelli tyre failures, including one that blew home hero Briton Lewis Hamilton's hopes of a home win in the other Mercedes car as he led from pole position.
However, the 2008 world champion produced a remarkable drive to storm from last place - which is where he was when he resumed his race - to finish fourth.
In all, four drivers were hit by tyre blowouts while championship leading defending triple world champion German Sebastian Vettel was forced to retire his Red Bull for the first time this year after inheriting the lead.
Hamilton's tyre explosion was followed by others for Brazilian Felipe Massa of Ferrari, Frenchman Jean-Eric Vergne of Toro Rosso and Mexican Sergio Perez of McLaren in a contest that saw two Safety Car interventions.
Australian Mark Webber, who fell to 15th on the opening lap, fought back to finish second for Red Bull ahead of Spain's two-time champion Fernando Alonso in the second Ferrari.
Rosberg, who won earlier in the season in Monaco, said that it was a wonderful moment for him to win a race his father former world champion Keke never won.
"This a very special day for our team in our home race," he said.
"We are progressing all the time so it's a very special day for me and the team today."
Webber, who had won this race twice, marked his last race at the track before leaving F1 at the end of the season, said he felt happy but also frustrated at just falling short.
"It was frustrating, but the boys did a great job," said the 37-year-old.
"There were a lot of issues with the tyres and we were lucky and it was a clean race for us."
Alonso, who cut Vettel's lead in the title race to 21 points, said the third placed finish was a bonus for him especially with his main rival failing to finish a race for the first time this season.
"It was a good race for us. We got lucky to recover some points and it was a good result for us in the end," said the 31-year-old.
"We know we have a lot of work to do and now we look ahead to the next race."
The drivers now head off to Germany for next Sunday's German Grand Prix.