World No. 2 Djokovic ended a 28-match winning streak by Murray with the 6-3, 5-7, 6-4 victory and avenged a loss by the British standout in last year's season-ending ATP Finals.
"Definitely one of the best ways to start a year," Djokovic said after needing two hours, 54 minutes to successfully defend his title in this event.
It also marked the first championship for Djokovic since his victory at the Rogers Cup in July.
The 29-year-old Serbian had a chance to close out the match in straight sets, only to see Murray save three match points before winning the next two games to force a deciding third set.
"I had three or four match points in the second set, he turned it around and I thought: 'Wow! I hope this isn't payback time," Djokovic said.
"He was close ... all the way to the last shot you never know with Andy."
Djokovic responded with a big break of his own to take a 4-3 lead in the third en route to improving his career record against Murray to 25-11.
--Grigor Dimitrov of Bulgaria advanced to the final of the Brisbane International by knocking off top-seeded and defending champion Milos Raonic 7-6 (7), 6-2.
The seventh-seeded Dimitrov won the final five games of the match to beat Raonic for the third consecutive time and earn a berth in Sunday's title match against No. 3 see Kei Nishikori of Japan.
"Milos is one of the biggest servers out there," Dimitrov said. "I knew what to expect, so I just had to execute it the right way."
Raonic, who staved off Rafael Nadal in three sets in the semifinals, remained optimistic about his chances in the upcoming Australian Open despite the loss.
"I feel very good about it," Raonic said. "I stepped up this week and did quite a few very good things."
Nishikori, who lost only two games in his quarterfinal victory, ousted the second-seeded Wawrinka 7-6 (3), 6-3 to punch his ticket to the final.
The Japanese star rode an early break into the second set to close out Wawrinka and will take a 3-0 career record against Dimitrov into the title match.
--Daniil Medvedev reached his first ATP final by holding off Dudi Sela 4-6, 7-6(2), 6-2 in the semifinals of the Chennai Open in India.
Medvedev was on the ropes with the Israeli serving for the match in the second set, but the Russian won three straight points to force the tiebreaker before dominating the third set.
The 20-year-old Medvedev will face second-seeded Bautista Agut of Spain in the title match. The Spaniard advanced with a 6-3, 6-3 victory over Benoit Paire of France.
"It's nice to be in the final here again," Agut said. "I will prepare for the match and play my best tomorrow."