Wild card Sinner triumphed 4-2, 4-1, 4-2 in the final, serving out to love and clinching victory when De Minaur hit a return into the net, much to the delight of a boisterous crowd in Milan.
It was a second successive runner-up finish for De Minaur at the season-ending tournament for top under-21 players.
"He's an unbelievable player," Sinner said. "I just tried to play my game and not make any errors. I didn't make many so I'm very happy with my performance."
The title caps a fantastic season for the 18-year-old Sinner, who opened the year at No. 551 but is now the youngest player inside the top 300, having risen to No. 95.
He recorded his first ATP Tour main-draw win only in April.
Sinner picked up $372,000 from this week's tournament, surpassing his career total before arriving in Milan.
But he doesn't plan on splashing out to celebrate.
"No," Sinner said with a smile when asked if he was going to buy himself something special. But he admitted even he didn't expect to do so well in Milan.
"I'm surprised because it's been an unbelievable week. All the players are unbelievable players. If not, they are not here."
"Sinner-Mania" is sure to grow. His run in Milan has stirred the crowds this week to near-hysteria and fans have packed the stands just to watch him practice.
De Minaur has lost only two of his 10 matches in two editions of the tournament in Milan, but unfortunately for the Australian they were both finals.
"It's a pretty simple match to evaluate," said the 20-year-old De Minaur, who is ranked No. 18. "I had nine break points and I wasn't able to convert any of them.
"Jannick played a really impressive match. He was putting me under pressure. In the end he just played too good."
Sinner dominated from the start and, after the opening games had gone with serve, broke to love to take the first set.
Roared on by his home crowd, Sinner never looked back and again broke De Minaur's serve at his first opportunity in the second set.
De Minaur managed to save a set point on his serve, but that was simply delaying the inevitable as Sinner served it out to go 2-0 up.
The noise grew to fever pitch when Sinner broke again in the third game of the final set, and he went on to wrap up the match in just over an hour.