The 34-year-old giant defeated home hope Alejandro Falla, 6-3, 7-6 (7/4) in the final.
Karlovic served a total of 104 aces during the claycourt tournament.
The former world number 14 is now projected to climb from 155 back into the top 100 with his victory.
"It was an unbelievable week," said Karlovic.
Contesting his first final in three years, Karlovic won the opening set in 31 minutes after securing the only break in the fourth game.
He was unable to capitalise on his three break points in the second set, but sealed the tie-break with two aces, taking his total for the final to 16.
Karlovic improved to a 5-3 mark in ATP finals, adding to his three titles in 2007 and the grasscourt crown in 2008 at Nottingham.
He also became the 11th winner aged 30 and over on the tour this season.
