2002 winner Chen rallied from a game down to sweep past a dispirited Lin 8-15, 15-5, 15-2 in 70 minutes.
Lin, 21, had been bidding to become the first player to hang on to the men's singles crown since Denmark's Poul-Erik Hoyer-Larsen, winner in 1995 and 1996.
The defeat was another blow for Lin, who was a leading fancy for the Olympic gold medal in Athens where he lost in the first round.
Sunday's final was a lacklustre affair between two friends and team mates and it failed to thrill the capacity 4,500 crowd.
Lin, who had been involved in some tough matches on his way to the final, said: "He played very well in the last two games and I felt very tired."
Chen, 25, who has been in four All England finals in the last five years, said: "This was even more exciting than 2002. I feel I am entering a new era."
Home fans were hoping for an English triumph later in the day in the mixed doubles final where Olympic silver medallists Nathan Robertson and Gail Emms were playing an unseeded Danish pair.
