The decision snapped a five-match losing streak in tournament finals for Kerber, who last won in April 2012. She dropped two championship matches earlier this year, including a three-set loss two weeks ago in Tokyo. The win in Austria was the third title in her career.
Ivanovic was appearing in her first final since November 2011. She falls to 11-5 in finals.
Kerber lost the first set she played in the tournament 0-6 but didn't lose as many as four games in a set again until Sunday in the tight match against Ivanovic. Kerber ended up winning 51 percent of the points on serve and 50 percent when Ivanovic served. She also had a 6-5 edge in breaks.
Ivanovic, the No. 3 seed, saved a pair of match points, cashing in her third break point of the game get to 5-5 of the second set. She had two more break chances in the 12th game before Kerber forced the tiebreaker.
Ivanovic won four consecutive points for a pair of set points at 6-4 of the tiebreaker but Kerber answered by taking the last four points for the win.
Kerber collected nearly $44,000 along with the Linz title, giving her a career total of more than $4.7 million. Ivanovic, taking home about $22,000 Sunday, had won about $10.7 million in her career.