Hewitt raced through the first set, then held off a comeback from the world number six to win 6-1 4-6 6-3 in two hours seven minutes.
It was Hewitt's 29th title on the ATP tour but his first since 2010, when he also beat Federer in the final at Halle.
Hewitt, the world number 60, is projected to rise to 43 on the rankings as a result of the win, and will be one of the most dangerous floaters when the Australian Open draw is made on January 10.
The Swiss great hadn't lost his serve all week, but he appeared sluggish from the beginning and was broken to love in the first game.
He managed to stop the rot on his next serve, however Hewitt was soon back in control, breaking Federer twice more to take the first set in only 27 minutes.
Hewitt lost only one point on serve in the first set as Federer imploded, stunning the sellout crowd on Pat Rafter Arena.
But the top seed gradually worked his way into form, halving his error rate and beginning to pressure the Australian.
He had the chance to break Hewitt in the fifth game but couldn't convert, however he struck immediately to break the Australian, then served three aces on his way to levelling the match
Hewitt struggled to hold serve at the start of the third but surprisingly it was Federer who cracked first, dropping serve in the fourth game when a tired looking forehand sailed long on break point.
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