Wicketkeeper McCullum slammed 101 in 109 balls, studded with 12 fours and two sixes, to help New Zealand amass 358 for six, the highest ODI score at Wankhede Stadium, before the Kiwis restricted their unfancied rivals to 261 for nine to take full two points.
Chasing the huge target, Canada gave a semblance of fight by skipper Ashish Bagai who made 84 in 87 balls with ten fours and Jimmy Hansra, who made a determined unbeaten 105-ball 70 with the help of four fours and a six.
The dismissal of Bagai, who put on 125 runs with Hansra before edging off-break bowler Nathan McCullum to the latter`s brother and wicketkeeper Brendon, and a cameo knock of 31 in 35 balls by opener Hiren Patel were the few highlights of Canadian run chase.
Brendon McCullum claimed three catches and also contributed to a run out to emerge the man of the match.
The Black Caps were handicapped in the bowling by the absence of their captain Daniel Vettori, nursing a knee injury sustained during their big victory over Pakistan. They suffered another blow after speedster Kyle Mills, who grabbed the first two Canadian wickets quickly, limped off the field with a leg injury.
After today`s victory, New Zealand are on top of Group A with eight points from five matches and they play their last league match against Sri Lanka at this venue on March 18.
Canada, with only two points from five ties, have no chance to progress further. They face defending champions Australia on March 16 in Bangalore in their last match.
The North Americans` run-chase, after the Black Caps posted the highest-ever ODI total at this venue, never took off in serious vein after they lost two wickets within the first five overs, Kyle Mills accounting for both the victims.
Mills sent back opener Ruvendu Gunasekara and one-down Zubin Surkari in his second and third overs before leaving the field because of a quadriceps injury in his left leg.
Both were snapped up by Taylor in the slip cordon to leave Canada gasping at 2 for 4.
There was a period of counterattack from the minnows when Hiren Patel struck three fours in an over from Tim Southee, one of which was a top edge behind wicketkeeper Brendon.
It was, however, too good to last as he departed for a 35-ball 31, that included five fours and a six off James Franklin, edging Jacob Oram to Brendon behind the stumps after having added 46 runs for the third wicket with Bagai.
Bagai and Hansra kept the Canadians in the hunt with their century stand for the fourth wicket that ended when the former was caught behind trying to accelerate scoring in the face of climbing asking rate.
Hansra retired hurt when on 53 in the 39th over when the total was 179 for five and Canada needed a staggering 180 runs in 71 balls. He later came back to resume his innings at the fall of the eighth wicket but the fight, whatever was left of it, was over though the minnows prevented their rivals from bowling them out.
Mills was the most impressive bowler for the Black Caps with two for two while the tall Oram (3 for 47), Tim Southee (1 fo 36), Jesse Ryder (1 for 15) and spinner Nathan McCullum (1 for 56) were the other wicket takers.
Earlier, New Zealand rode on Brendon McCullum`s maiden World Cup ton and stand-in skipper Ross Taylor`s breezy half century to post 358 for six after being sent into bat.
Apart from McCullum and Taylor, other contributors were Jesse Ryder (38), Scott Styris (20-ball 35), Kane Williamson (34) and James Franklin (31 not out in eight balls). Franklin hoisted Rizwan Cheema for three sixes and a four in the final over to help the Kiwis cross the 350 mark.
The last ten overs yielded 122 runs, including 31 runs in the last, that helped the Black Caps shoot past the previous highest aggregate of 299 for four made by India against Sri Lanka in 1987 at this ground which is hosting its first tie in the ongoing World Cup and first international in more than three and a half years.
McCullum was on song from the start after New Zealand were asked to bat on the newly laid turf and proceeded to cut, pull and drive his way to his hundred, his third in 189 ODIs.
The 29-year-old wicketkeeper also put on 53 runs for the first wicket in 9.5 overs with his in-form opening partner Martin Guptill (17) to lay foundation of the massive total.
McCullum consolidated the innings with another partnership of 96 with one-down batman Ryder before giving further impetus with Taylor through a stand of 36 for the third wicket.
He fell just after Canada opted for the bowling power play, unable to clear short cover fielder Ruvindu Gunasekar.
He had raced to his 100 in 107 balls a few minutes earlier.
Taylor, captaining the side in place of injured Daniel Vettori and coming into the tie after his match-winning 131 not out against Pakistan at Pallekelle, then took over the attacking reins. He slammed four sixes and a four to take 30 runs off Harvir Baidwan in the 39th over to up the tempo.
Taylor, appearing well set to race to his second hundred of the tournament, was dismissed in the 41st over.
For Canada, off-spinner John Davison, a veteran of three World Cup campaigns, applied the brakes with an economical spell of nine overs while leg-spinner Balaji Rao finished with two wickets, including that of Taylor, while Harvin Baiwan grabbed three.