Murray sets sights on top three
The 3-6 6-2 6-0 victory over Nadal was the Murray's second title in two weeks after winning in Bangkok and ended Nadal's bid to become the first man since Pete Sampras in 1993-94 to retain the Tokyo crown.
"I played some great tennis, especially in the third set," Murray said after inflicting the dreaded 'bagel' on Nadal in the decider to win his 20th career title.
"That was arguably the best tennis I've played against Rafa," added the Scot, who had lost 13 of his previous 17 matches against the world number two.
"I've given myself the target of ending the year at number three (in the world) so hopefully I can carry on that form".
Top seed Nadal took the first set on a superb lunging volley but Murray hit back brilliantly, breaking for 3-1 in the second with a rifled forehand into the corner.
Murray, accused in the past of having a 'glass jaw', nervelessly saved triple break point in the next game with three cracking aces to leave Nadal shaking his head.
The second seed, who had been screaming at himself and pointing furiously at his box in the first set, levelled the match with a bullet backhand that Nadal could only dump into the net.
Nadal's game unravelled and the 10-times grand slam champion wore the look of a tortured man in the final set as Murray caught fire, ripping winner after winner past the title holder.
Fans of Nadal, many draped in Spanish flags and some in red and yellow afro-style wigs, fell silent as Murray tore through the decider in just 29 minutes.
Murray set up triple match point with a rocket forehand down the line before forcing Nadal into a loose backhand to end a pulsating final after two hours, 16 minutes.
"Andy played unbelievable. He deserves the title," said Nadal, who was playing in his first tournament since helping Spain reach the Davis Cup final last month.
"I've lost a few sets 6-0 of course. You prefer it doesn't happen, but he played fantastic and in the third set he started to play at a really high level. Accept. That's it".