Britons bought 51 million bottles of the spirit last year, and sales were up by £104 million this Christmas compared with the previous year, the Wine and Spirit Trade Association (WSTA) said.
The figure is 27 per cent higher in volume, the equivalent of more than nine and a half million more bottles, than 2016.
Over 16 million bottles of gin, worth £413 million, were sold in the 12 weeks to the end of December - an extra three and a half million bottles bought or 28 per cent in volume on the 2016 festive season.
The rapid growth in UK distilleries and the increasing number of gin brands arriving on the market last year helped the record-breaking sales.
Britain's love for the tipple made gin a popular gift this Christmas, along with a wide range of gin-themed gifts such as gin baubles, gin advent calendars and gin glassware.
Last year was also a record-breaking year for British gin exports, which broke the £500 million barrier to hit £530 million in value sales.
There are now 315 distilleries in the UK, more than double the number that were operating five years ago.
There are now well over 100 British gin brands on the market, a doubling of the number since 2011.
WSTA chief executive Miles Beale said: "We were amazed by the growth of gin in 2016, but 2017 sales of the quintessentially British spirit have surpassed all records again.
"At the WSTA we are constantly being asked what is the magic formula behind the growth in gin sales. It is a delightful combination of a quality British product steeped in history combined with skillful innovation by UK distillers who are producing a huge range of gins catering for the consumers' increasingly sophisticated palettes.
"The versatility of gin with its diverse use of botanicals means there is now a gin out there for everyone. The popularity of giving gin as a gift means we are expecting sparkling sales for Mother's Day."