The two Americans traded breaks in the opening set before the greater consistency of Fritz took him ahead in the tiebreak and he secured it with a cracking forehand.
The second set was equally intense as Fritz's serve proved impenetrable and Tiafoe bravely defended several break-point chances inside Tokyo's Ariake Coliseum.
In the tiebreak, Fritz raced into a 6-2 lead with relentless power and accuracy before sealing victory when Tiafoe's forehand went out.
Fritz, assured of breaking into the top 10 after beating Canada's Denis Shapovalov in the semi-finals, also won titles in Eastbourne and Indian this year.
"It's so crazy, and I couldn't have written it any better," he said after wrapping up victory just under two hours.
"It's exactly what I needed for the Race, for my ranking, to kind of put me in a good position for the end of the year," he said.
Fritz, the 10th American to win the Japan Open title and the first since Pete Sampras in 1996.
He was in a week-long quarantine in South Korea after contracting COVID-19 and flew to Tokyo on Wednesday on the morning of his first match at the Japan Open.
Tiafoe, Fritz's Laver Cup teammate, still awaits his first title this year but he will climb two spots to a career-high 17th in the rankings.