India posted the highest Cup total of 413-5 after being put in to bat, with Sehwag (114), Sourav Ganguly (89), Yuvraj Singh (83) and Sachin Tendulkar (57 not out) making merry against a mediocre Bermudian attack.
The previous best total was 398-5 by Sri Lanka against Kenya at Kandy in the 1996 World Cup.
It was also the biggest victory in one-day internationals by run-margin, the previous highest being Australia's 256-run win over Namibia in the last World Cup in South Africa.
Bermuda, shot out for 78 during their 243-run loss against Sri Lanka in their first game, did better this time as they managed 156 which was still not good enough to save them from a second successive massive defeat.
Left-handed David Hemp, who plays for English county Glamorgan, top-scored with a solid 76 not out, the first Cup half-century by a Bermudian. Dean Minors (21) was the other notable contributor.
Leg-spinner Anil Kumble and seamer Ajit Agarkar grabbed three wickets apiece, while left-arm fast bowler Zahaeer Khan finished with two.
India, who had suffered a shock five-wicket defeat against Bangladesh, now need to beat Sri Lanka in their last Group-B match here on Friday to keep alive their hopes of qualifying for the next Super Eight stage.
The Indian batting might was earlier on view against the weakest side in the group as Sehwag, Yuvraj, Ganguly and Tendulkar gathered runs with consummate ease on a good batting track.
Sehwag, who had just one half-century in his previous 14 games, smashed an 87-ball 114 with three sixes and 17 fours for his eighth hundred - his first in two years.
The 28-year-old opener shared a 202-run stand for the second wicket with in-form Ganguly to virtually bat the debutants out of the match.
Ganguly, who scored 66 in his team's below-par batting performance against Bangladesh, struck two sixes and three fours in his 114-ball knock.
He looked set to become the first batsman to score five centuries in the World Cup when he was stumped attempting a big shot. Australians Ricky Ponting and Mark Waugh, and Indian Sachin Tendulkar are others with four hundreds.
India, keeping an eye on the net run-rate after losing their opening match, sent in big-hitters Mahendra Dhoni and Yuvraj ahead of Tendulkar. The move paid off as runs came thick and fast.
The Indian innings contained 18 sixes, with Yuvraj hitting seven in his 46-ball knock and Tendulkar four in his 29-ball innings.
India were in a must-win situation after being upset by Bangladesh in their previous game, but found the going easy against Bermuda who looked clueless after early second-over celebrations.
New-ball bowler Malachi Jones, at 17 one of the youngest cricketers in the tournament, struck with his first delivery when he had opener Robin Uthappa caught by burly Dwayne Leverock, who dived to his right to hold the ball.
The Bermudian cricketers celebrated the early success as if they had taken more than just a wicket. But the joy was short-lived as their attack was soon put to the sword by Sehwag.
The opener made the most of the opportunity of regaining form against the minnows, dominating the seamers and spinners with a wide range of attacking shots.
Sehwag raced to his half-century off 43 balls with 11 fours and then took 38 more deliveries to complete his century.