The 35-year-old Froch, who lost to Kessler in Denmark three years ago, put on a typically gutsy performance to win with a scorecard that read 115-113, 116-112 and 118-110 in favour of the Nottingham fighter to the delight of the 20,000 crowd.
Froch's record is now 31-2, with his only other defeat coming at the hands of American Andre Ward in Atlantic City in 2011, compared to Kessler's 46-3 after an action-packed fight that saw the Dane hanging on near the end of the final round.
"It feels really, really good, only thing that feels bad is I have had to beat a real gentleman and a nice man, Mikkel Kessler," Froch told Sky Sports. "It's 1-1 now, who knows do you fancy a third one? Best of three maybe?
"I deserved to win, but he won't lie down for any man and massive respect to him," added Froch before turning his thoughts to a possible rematch with unbeaten WBA title holder Ward who was watching at ringside.
"The winner of this fight should be moving on to avenge their other loss and now I move on to the second best boxer in the world," said Froch. "Let's get Andre Ward over to the UK and fight him here."
The 34-year-old Kessler, whose only other defeats were against unbeaten Welshman Joe Calzaghe in 2007 and Ward in 2009, said: "I gave it my all but didn't have the energy and couldn't cope with Carl. It is nice to fight such a warrior."
On the undercard, fellow super-middleweight George Groves went 19-0 after doing a professional job on Uruguayan Noe Gonzalez Alcoba in chief support to the main event.
Groves won four rounds with a fluid jab, gradually working in pinpoint body shots before a particularly flush one in round five opened Alcoba up enough for 'Saint' George to drop him with a stiff right to the face.
With the outsider clearly seeing stars from the shot, the referee waved the bout off, making Groves only the third man after Felix Sturm and Adonis Stevenson to best Alcoba.
And Tony Bellew put in a much-improved showing to become a mandatory world title challenger with a light-heavyweight unanimous decision over Isaac Chilemba, after the duo drew a disappointing contest in Liverpool in March.
Bellew can now challenge for world glory for the second time, having picked up his only defeat in his other championship opportunity against Welshman Nathan Cleverly.