The Briton's victory was his first in a Masters Series event, earned him a cheque of 450,000 euros ($526,800) and re-established the 29-year-old among the world's top players.
"This is my greatest achievement," said Henman who has been in four Wimbledon semi-finals without reaching the final.
"I couldn't be happier this week the way I've played, the people I've beaten and now winning the title.
"To finish the year on such a positive note is really exciting and I'm keen to build on this."
Henman, totally in command in the first set of a lacklustre final, was cruising midway through the second set before a series of unforced errors allowed Pavel to break back to 5-5 and force a tiebreak.
Up 6-4 in the tiebreak Henman, who has a habit of collapsing under the pressure of the big occasion, wasted his first set point with a double fault and then the second.
PAVEL FRUSTRATION
Pavel slammed his racket to the ground in frustration when a Henman volley earned the Briton his third set point and this time he made the most of it, winning the tiebreak 8-6.
With Pavel serving with more vigour and stepping into Henman's delivery, the third set was evenly matched until the tiebreak which Henman ran away with 7-2 to clinch the title.
Asked if he had ever doubted he would win, Henman said: "Never, not one doubt. I felt totally in control and I was playing tennis of a level that I had no need to panic."
It was the first Masters Series final for seven years between two unseeded players. Pavel's last title was in 2001 at the Montreal Tennis Masters and Henman had lost his previous two Masters Series finals.
"He's won one of these before and it's very kind of him to let me get a trophy on my board," Henman said with a smile.
SHOULDER SURGERY
Henman lost just one set in six matches and had played superb serve-volley tennis to beat Wimbledon champion Roger Federer in the quarter-finals and newly crowned world number one Andy Roddick in the semis.
"To reel off six in a row against this quality of player is very satisfying," Henman said.
He has struggled to find his best form following shoulder surgery 12 months ago but he said this week he had never played as consistently well in his career.
Once ranked as high as fourth, he had slipped as low as 42 but Sunday's title returns Henman to the top 15.
Pavel, out for six months this year with wrist and back injuries, did not win a match in his first eight tournaments of 2003 and appeared exhausted in the first set after his three-set semi-final defeat of 14th seed Jiri Novak.
As Henman faltered, he charged the net in the second set with great success but was never able to capitalise fully on Henman's drop in performance.
The nine Masters Series tournaments are ranked below the four Grand Slams, none of which Henman has won.
The season culminates in the Tennis Masters Cup, starting November 8, where Roddick will attempt to hold off French Open champion Juan Carlos Ferrero and Federer in his bid to end the year as number one.
