In a game where both men scored heavily throughout, Warren proved the stronger in the second half of the contest to secure his first world title.
"This is only a dream, it's not reality," said Warren, who became the fourth Welshman to win the world title.
"I think [Williams] will be playing world champion multiple times. This might be my last chance."
Warren speechless after BDO triumph
Williams took the first set against the throw and then added the second after Warren missed three arrows at double 18 to tie things up.
It was not pretty when Warren got on the board but he crucially edged the third set 3-2, hitting one, double-one to get on the board.
The veteran took advantage of misses from his opponent to get back on level terms and then brought his a-game in the fifth set, nailing an 11-darter en route to taking a 3-2 lead.
Williams would not let his countryman get away and the pair went into the interval at three-apiece.
After the break it was the younger man who wilted, with Warren's superior scoring putting distance between them and, in typically dramatic fashion, he missed double-twenty and double ten before finding double-five with his third dart to put him a set away from victory at 6-4 up.
Williams did not let him take the crown easily, nailing his nemesis double-8 to level up at 2-2 in the deciding set. Both men scored heavily in the decisive leg, Warren throwing first with two 140s and Williams with a 140 and a 180.
Warren had a dart at the bulls eye to win, missing, but got back in when Williams failed to check out 121. He had two darts at double-10 to win. He only required one.
Ignore the critics, BDO Darts World Championship still puts on a show