The win secured Thiem's fourth title of the year after triumphs at Indian Wells, Barcelona and Austria.
Thiem, who was forced to dig deep and come back from a set down in the semi-final against Karen Khachanov, broke Tsitsipas five times while dropping serve three times to lift his first ever title in Asia.
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"Honestly I think this was one of the best matches I've played so far in my whole career," Thiem said.
"I know it's hard for you, Stefanos. You played amazing and I really hope that we have a lot more finals in the biggest tournaments.
"Last year we had a great rivalry going on and I hope it continues with many more finals to come."
This was the first time the pair had competed in a final after playing each other five times in 2018. Thiem now leads Tsitsipas 4-2 in head-to-head meetings.
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The top seed dropped serve twice in the opening set to give Tsitsipas the advantage while the Greek fired four of his seven aces to take the lead.
Tsitsipas, 21, was clearly the more fired up player, taking out his frustration on his racket after losing a point in the first set. However, Thiem recovered in the second set, saving three of four break points while converting two himself.
In the deciding set, it was Thiem who dominated, breaking twice to take a 5-0 lead.
Tsitsipas won a game back but only delayed the inevitable as Thiem wrapped up the match for his 15th ATP singles title.
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