Wiggins, who will start Sunday’s road race, skipped the event after an exhausting year that saw him become the first Briton to win the Tour and then took Olympic gold in London.
Swiss Fabian Cancellara, the 2008 Olympic champion and four times time trial world champion, also did not take part after failing to recover from a shoulder injury.
In the circumstances, the race was Martin’s to lose.
“There was a lot of pressure on me, the stress was pretty different to handle, everybody was looking at me,” the German told a news conference.
“I did not expect it to be so hard, I had to give everything, I was totally dead. The finale was the hardest ever in my career,” added Martin, who lay on the ground exhausted after crossing the line.
Martin, who won the trade teams world title on Sunday with Omega Pharma-Quick Step, clocked 58 minutes 39 seconds, averaging an impressive 46.755 kph.
The 27-year-old beat Phinney by only five seconds after the American had set the best time at the first check point.
Heavy showers disrupted the early starters but roads were mostly dry for the favorites on a tricky, hilly course.
It did not help Marco Pinotti, though, as the Italian suffered a suspected broken collarbone when he crashed out in a left-hand corner while battling for a place in the top three.
Vuelta champion Alberto Contador of Spain started the time trial looking for a place on the podium but was never in the mix, even facing the embarrassment of being overtaken by Martin, who had left the starting ramp two minutes behind.
Contador finished a disappointing ninth.
Phinney did his best in the final climbs to Rozekoel (800 meters at 5.4 percent) and Cauberg (1,200 at 5.8) but Martin had too much power for the American.
It was another disappointment for Phinney after he finished fourth in the Olympic time trial in July, but the American knew he could do little against Martin.
“There were so many turns, so much Dutch road furniture like the roundabouts,” he told a news conference.
“I could have done some things differently, have gone faster, but I had the best time trial of my life. I had a better ride than at the Olympics, that was all I could ask for today.”