Khachanov became the third different first-time winner of a Masters tournament this year -- joining John Isner and Juan Martin del Potro-- and denied Djokovic a fourth title in a row ahead of his return to world number one on Monday.
"To finish the season like this is really a dream come true," said Khachanov, who will rise to a career high of 12th when the latest rankings are published on Monday.
Going into the event, Khachanov had won just three of 19 encounters against players in the top 10 but claimed a fourth such scalp in a week after snapping Djokovic's 22-match winning run.
Djokovic, who will reclaim the top ranking from Rafael Nadal for the first time in two years, made a strong start in his pursuit of a record-equalling 33rd Masters title as he broke for a 3-1 lead in the opening set.
But world number 18 Khachanov, a winner at the Kremlin Cup in Moscow last month, hit back in the very next game as Djokovic dragged a forehand into the tramlines, down break point.
The unseeded Russian then broke Djokovic for a 6-5 lead, momentarily faltering as he tried to serve out for the set before calmly regrouping to surge ahead.
Djokovic overcame Roger Federer in an energy-sapping thriller that lasted over three hours in Saturday's semi-finals, and the Serb began to look weary as he dropped serve to a fall behind early in the second set.
Khachanov refused to give his opponent the slightest opening, and sealed a memorable victory after an hour and 37 minutes when a Djokovic forehand went long.
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