Karlovic, who recently returned after missing 2 1/2 months while battling viral meningitis, dispatched Falla 6-3, 7-6 (7-4) at Centro de Alto Rendimiento, taking his first triumph since the Nottingham event of June 2008.
The 34-year-old used a tiebreaker to notch is fifth overall ATP Tour title, becoming the second-oldest tour winner this season. Germany's Tommy Haas, 35, won the BMW Open in May.
Falla, meanwhile, was foiled in a bid to become the first Colombian to claim a title since 1995 in his maiden championship match appearance.
He made Sunday's final after upsetting top-seeded Janko Tipsarevic Friday.
2014: The Year in Music [PHOTOS]