The Spaniard reached the turn in five-under-par 31 and added a crucial sixth birdie on the 16th to finish 17 under, one shot ahead of the Swede.
Stenson fired himself right into the mix with an eagle as well as five birdies in a round of 65, but ultimately had to settle for second place as Larrazabal’s nerve held over the closing holes.
The Barcelona-born 32-year-old said: “I knew that I was in a good position, two groups ahead, and I knew that I had to start very fast. I had to start with a few birdies in the first holes and I started very well.
“I think I was five under for the front nine and hitting the ball great, as well as I have hit it all year, and my putting was awesome. I made a lot of great putts.
“It’s tough coming in. You have a lot of holes with a lot of trouble, so I knew I needed to put myself in a good position to make birdies. I made birdie on 16, a great shot.
“I had memories from the past – I lost the tournament over there back in 2010, going 19 under par with three to play, and I lost it over there, so I had that in my mind, ‘Put it on the green and try to make the putt’. If not, four is a great score in 16.”
Stenson’s birdie at 18 briefly left him in a tie for the lead, but a three for Larrazabal on the 16th proved decisive.
Asked if he was aware on the course how close the Swede had been to him, he replied: “I knew, I knew exactly.
“Henrik is not German but he has a lot of German friends, and we could hear the roar. That kind of roar is for [Martin] Kaymer or for one of the best in the world, and I knew that Henrik was coming fast.
“But he birdied the last and I birdied 16.”
It was Larrazabal’s second win in Munich and fourth on the European tour, and it came two months before he is to marry girlfriend Gala Alten.
Stenson’s late flourish took him one shot clear of England’s Chris Paisley, whose 15-under-par four-round total of 273 earned him third place in his own right, although he might have claimed a share of second with a long putt on the 18th which came up just short.
South African Retief Goosen tied for fourth with Thailand’s Kiradech Aphibarnrat and another Spaniard, Carlos del Moral, a further stroke back, with Northern Ireland’s Michael Hoey in joint-seventh with Swede Peter Hanson on 13 under.
Paisley’s compatriot David Howell matched Stenson’s 65 to claim a share of ninth place, but it proved a sobering day for another Englishman, overnight leader James Morrison.
The 30-year-old did not make a single birdie and carded no fewer than five bogeys as his chance of glory slipped away amid the charge ahead of him.