Chasing Super Kings' modest total of 163 for five, the Royals rode on a brilliant all-round display by Yusuf Pathan, who took three wickets and top-scored with a 39-ball 56 to overhaul the score off the last ball after needing eight from the last over.
Sohail Tanvir (9 not out) hit the winning run, a pull off the expensive L Balaji, in the company of his inspiring captain Shane Warne, who was not out on 9 in a final score of 164 for seven.
The winners received the top prize of USD 1.2 million and a glittering gem-laden trophy while the runners-up won USD 600,000.
It was a superb final, although a low-scoring one on a slow track, that made up for the disappointment of one-sided semifinals held at the Wankhede Stadium.
The 25-year-old Pathan did the star turn for the winners by sending back the top three Super Kings' batsmen with his off breaks while conceding 22 runs.
The Baroda right-hander then stepped in when his team was struggling at 42 for three to play a punishing knock of 56, using his bat like a sledgehammer while hitting four sixes and three fours to put Rajasthan Royals on the path to a thrilling victory in front of 55,000 spectators.