Slater was bidding for a record fifth title at Bells but was just out-gunned in a high quality final in two metre surf at the iconic Victoria break.
The victory was Fanning’s second at Bells, the Australian also winning 11 years ago in 2001.
American Slater scored a perfect single-wave score of 10 half way through the heat but his second best score of 8.07 was not enough to beat Fanning’s scores of 9.7 and 9.1
Gold Coast native Fanning had surfed to a high quality through the day, taking out Kai Otton in the quarter-finals and defending champion Joel Parkinson in the last four.
On his side of the draw, Slater took out Australian aerial specialist Josh Kerr in the quarters before beating Frenchman Jeremy Flores in the semi-finals.
Fanning exploded out of the blocks in the 40-minute final, posting his 9.1 early before Slater produced a full aerial rotation, landing flat on the water in front of the wave, to record the perfect score.
But the Australian responded in kind, posting a 9.7 and leaving Slater needing another big score to snatch the win.
Despite catching a couple of late waves, the American was not able to record higher than 8.07, leaving Fanning free to collect his first title at Bells since his wildcard entry as a teenager in 2001.