The 34-year-old has now become a three-time world champion in the weight division.
It was hard to separate the fighters in a bright opening round as both worked their jabs, sizing each other up.
Froch began to exert his dominance in the second round, with Bute forced to steady himself after a couple of stiff shots from the Nottingham fighter.
Bute suffered the brunt of the punishment at The Cobra's hands in the third round and he looked in deep trouble at one stage as the shots rained in.
The Romanian's legs looked like jelly as an unrelenting Froch chased him around the ring, but he managed to hold out for the bell by grabbing at every opportunity.
A big shot rocked Bute as the bell rang signalling the end of the fourth round, and he stumbled back to his corner in a daze.
The beginning of the end came while Froch had Bute cornered less than a minute into the fifth, pummeling him with lefts and rights in a blitz that saw Bute slump against the ropes.
The referee started the 10-count but the 32-year-old had a distant, far away look in his eyes and the bout was waved off to the delight of the home crowd.