Novak Djokovic claimed the ATP World Tour Finals title after securing a 7-6 (8-6) 7-5 victory over Roger Federer at the O2 Arena.
Federer dominated the start of each set but the world No 1 showed all of his battling qualities to come back on both occasions and complete the victory in two hours and 14 minutes.
Wimbledon champion Federer was masterful in patches but could not sustain his brilliance throughout the match and it was Djokovic who stepped up in the crucial moments.
The top seed, who took the spoils at the season-ending event for a second time, went through the tournament unbeaten to take home a bumper prize cheque of $1.7 million.
A rout looked like it could be on the cards in the opening stages as Federer made an ominous start, winning the first nine points of the match to move a break up.
But Djokovic quickly grew into the contest and was soon going toe-to-toe with his opponent from the baseline, managing to hold serve in the fourth game before breaking his opponent back in the next.
And it was Djokovic who moved a break ahead following a marathon ninth game before being pegged back while serving for the set, putting things on course for a tie-break.
In the breaker Federer saved a set point with an outrageous forehand winner but Djokovic converted his next opportunity to edge ahead after 72 minutes of captivating tennis.
The opening game of the second set lasted 10 minutes and was won against serve by Federer, who kept his nose in front through some testing moments only to be broken back while serving for the set.
And Djokovic struck again in Federer's next service game, smashing a backhand winner down the line on championship point to get across the line.
The Serb was quick to pay tribute to his opponent, as well as the team that has supported him throughout the season.
"It is always a privilege and challenge to play Roger - congratulations to him on an amazing year," Djokovic said.
"This is definitely one of the best tournaments we have around on the tour. It's a pinnacle of all the tournaments throughout the season and the best players are playing here."
He added: "Thank you to all the fans for their support and thanks to my team, I couldn't have done it without them."
Federer regained top spot in the world rankings from Djokovic earlier in the year but admitted the Serb deserves to finish on top of the pile at the end of 2012.
Federer said: "Congratulations to Novak on an amazing tournament and year - you are the best.
"It has been an amazing year for me and I would like to thank my team for following me around the world and thanks to all the fans."