The seven-time world champion eased into a 5-2 lead with breaks of 52, 71, 59 and 105 and compiled another half-century in the eighth frame before Fu cleared the colours to keep the match alive.
In front of 9,000 fans at the Hong Kong Coliseum, beating Saturday's record of 7,500 for the semi-finals, Fu also won the ninth frame with a break of 56 before O'Sullivan sealed victory in stunning fashion.
The 46-year-old compiled a total clearance of 114 despite the pink and black being out of commission until the last two reds, leaving Fu to compare his opponent to Michael Jordan and Tiger Woods during the presentation ceremony.
O'Sullivan, who earnt £100,000 for his first title of the season, said: "It feels fantastic. First of all I just want to say this is probably the best tournament I've ever played in.
"We've never played in front of more than maybe 3,000 fans. To have 9,000 fans watching a snooker match (is) unheard of so hopefully we can come back year on year because the fans have been fantastic."
Fu had underlined a remarkable resurgence by compiling a maximum 147 break in the deciding frame of his semi-final against John Higgins on Saturday.
A three-time ranking tournament winner and former World Championship semi-finalist, the 44-year-old underwent eye surgery in 2017 then spent almost two years off the tour due to the Covid-19 pandemic.
"To play Marco in front of the Hong Kong fans is like a dream," O'Sullivan added. "It's like playing James Wattana in Thailand.
"Marco is the number one Hong Kong player ever and I'm so happy to see Marco back. He was off the tour for a couple of years, his health is good and you can just see class is always there.
"It's great to see him back and playing fantastic snooker and I'm sure he will be winning some tournaments soon because he's too good a player not to."