Murphy had led 7-2 after the first session, but the world number two fought back to 8-6 to set up a nervy finale before Murphy recovered to win the final two frames and take the title.
The win marked a first ranking event success in three years for 'The Magician'. He now has five ranking titles to his name in all, having won the 2005 World Championship, 2007 Malta Cup and 2008 UK Championship.
After winning the invitational Brazil Masters in September 2011, Manchester-based Murphy went 29 months without winning a tournament of any sort.
Determined to end the drought, he worked long and hard on all aspects of his game, and also embarked upon a strict health regime which saw him lose over three stone.
Improvements in his game, his fitness and his self esteem have been reflected in impressive results since the New Year and he tasted success at the Gdynia Open European Tour event last month.
Having knocked out Ding Junhui, two-time defending champion Mark Allen and good friend Selby en route to winning the World Open, it will serve as the biggest boost to his hopes of a second world title yet.
"Mark was under no pressure at 7-2," said Murphy. "I knew he would come back and that I would have to wait for my chances.
"We're very good friends and we've beaten each other many times.
"Today was a good match, we both played well in parts. I'm so happy to win a ranking event again, it has been a long time.
"Snooker is a very tough game now so these events are hard to win. There are three more tournaments to go this season and maybe there's something left in the tank.
"There's no secret to it, I've just been working very hard and practising every day for a long time. It worked in Poland and it's worked here. On Tuesday I'll be back on the practice table."
Murphy got off to a hot start as breaks of 64, 80 and 52 helped him enter first mid-session interval 4-0 ahead. Selby finally got off the mark upon their return before a 91 halved the deficit at 4-2.
It was here that Murphy entered his finest form of the final, and perhaps his best of the tournament: he racked up consecutive runs of 98, 105 and 112 to move within three frames of the trophy at a resounding 7-2 at the end of the morning session.
The resilient Selby, however, wasn't willing to give up hope of his fourth ranking title just yet. Beginning the second and final session with a 78, the Leicester man then made it 7-4 from the final red of frame 11.
Murphy looked on the verge of a collapse as an error-strewn 12th frame allowed Selby to make it 7-5 but, crucially, he was able to hold his nerve with a 60 break to restore his three-frame cushion.
When Selby gifted the table to his opponent having pulled back to 8-6 following a 49 break, Murphy's excellent 78 clearance was all but the end of the Selby comeback - Murphy clinically sealed the championship-winning frame after that with three measured visits to the table.
Selby, who was also runner-up at the UK Championship and the Masters, said: "In the first session I started badly.
"Giving someone of Shaun's capability a 7-2 lead is hard to come back from. Shaun played very well all day. He punished me and won some really important frames, especially the one to go 9-6."
- Sports & Recreation