The sixth-seeded Chinese emerged from a see-saw battle 21-16 14-21 21-13 in Fuzhou, getting the better of the world champion and top seed in 72 engrossing minutes.
The 23-year-old Axelsen has had a superb year, winning the world title and becoming the leading figure in the men's game.
But today's defeat extends his poor run against the more experienced Chen, 28, who has now won eight of their nine meetings.
It was Chen's first China Open crown since 2013.
Japan's Akane Yamaguchi beat Chinese qualifier Gao Fangjie to win her first Superseries title of the year.
Fifth seed Yamaguchi had been favourite against the 19- year-old Gao, who miraculously reached the final having never previously won a Superseries main-draw match.
It all proved too much for the teenager on the day, even with the backing of the noisy home crowd, with the 20-year-old Yamaguchi coming through 21-13, 21-15 in 41 minutes.
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