Smith came through a topsy-turvy encounter against Anderson to scoop the £12,000 top prize and clinch his third PDC title on an entertaining day of action at the Barnsley Metrodome.
The European Champion claimed a host of major scalps en route to victory, before defying a spirited fightback from Anderson to deny the Scot a first ranking title since February 2020.
Smith seized the early initiative in Saturday's showpiece, reeling off three consecutive legs to establish a 4-1 cushion, only for Anderson to respond with a classy 124 checkout in leg six.
Smith restored his three-leg buffer before the Scot replied with three straight legs of his own to level at five apiece, and a clinical 120 checkout in leg 11 catapulted Anderson into a 6-5 advantage.
However, Smith regained control with back-to-back 15-dart legs to move to the brink of victory at 7-6, before sealing the deal on tops after Anderson was unable to produce a 116 skin-saver.
"I think I thoroughly deserved the win if you look at the calibre of players I've beaten," reflected Smith, who now moves into the world's top 16 for the first time in his career.
"I felt a bit edgy against Gary, but I told myself to just concentrate and stop thinking, and thankfully I got away with it, because we all know what Gary can do.
"I just play the player in front of me. I try to keep my feet on the ground. Nothing has been going right for me on the floor, but that changed today.
"I wasn't quite expecting it. My confidence hasn't been the greatest of late, so I am really happy to win this title."
Smith kicked off his campaign by firing in back-to-back ton-plus averages in wins over Martijn Kleermaker and Jim Williams, relinquishing just three legs across both matches.
The 34-year-old dumped out top seed Luke Humphries in round three, before accounting for Premier League duo Dimitri Van den Bergh and Nathan Aspinall to seal his spot in the semi-finals.
The Dover darter then survived three match darts in an edgy last four showdown against Martin Schindler, who was unable to close out victory despite opening up a 5-3 cushion at one stage.
Anderson, meanwhile, produced a string of magnificent displays to pocket the £8,000 runner-up prize, which moves him closer to the provisional qualification places for July's World Matchplay.
- Ross Smith 6-3 Dimitri Van den Bergh
- Nathan Aspinall 6-2 Madars Razma
- Martin Schindler 6-2 Danny van Trijp
- Dirk van Duijvenbode 6-2 Jeffrey De Zwaan
- Gary Anderson 6-4 Keegan Brown
- Chris Landman 6-5 Radek Szaganski
- Gerwyn Price 6-4 Nathan Rafferty
- Raymond van Barneveld 6-1 Kevin Doets
The veteran Scot averaged 102 to dispatch Arron Monk in his opener, and after defying a ton-plus average from Gian van Veen in round two, he crashed in a 104 average to eliminate Croatia's Boris Krcmar.
The two-time World Champion then produced the performance of the day in his last 16 tussle against a brilliant Keegan Brown, averaging 111.92, posting six 180s and wrapping up a 6-4 victory with a 121 finish.
Anderson later registered his fourth ton-plus average of the day in his comeback win over Chris Landman, which he followed up with a hard-fought 7-5 triumph against Gerwyn Price in the semi-finals.
- Ross Smith 6-3 Nathan Aspinall
- Martin Schindler 6-4 Dirk van Duijvenbode
- Gary Anderson 6-4 Chris Landman
- Gerwyn Price 6-1 Raymond van Barneveld
Price posted five successive 100+ averages in his run to the last four, knocking out Josh Rock and Raymond van Barneveld before succumbing to Anderson in a dramatic tussle.
Price claimed £4,000 for his exploits along with his fellow semi-finalist Schindler, who continued his impressive form with wins against Darius Labanauskas, Ian White and Dirk van Duijvenbode.
Van Duijvenbode was joined in the last eight by his fellow countrymen Van Barneveld and Landman, with former UK Open champion Aspinall making up the quarter-final line-up.
- Ross Smith 7-6 Martin Schindler
- Gary Anderson 7-5 Gerwyn Price
Meanwhile, World Champion Michael Smith, Premier League table-topper Michael van Gerwen and newly crowned UK Open champion Andrew Gilding were among the stars to suffer first round exits.
- Ross Smith 8-6 Gary Anderson