The 11-5 11-8 11-7 victory came at the same Sirifort CWG Block where he defeated the same opponent to seal Commonwealth Games gold in October.
Sunday's triumph signalled the 14th successive victory Sheffield-born Matthew has enjoyed over Leeds's Willstrop, who last savoured success over his contemporary back in December 2007 at the English Open in Matthew's hometown.
The 30-year-old's latest success in India came two days after he secured a return to the top of the PSA world rankings with a hard-fought victory over fellow Englishman Daryl Selby in Friday's quarter-finals.
"I'm obviously delighted to finish 2010 on a high note by winning this title," said Matthew, who spent three months as world No 1 earlier this year before he was replaced by Egyptian Ramy Ashour in September.
"It's easily been the best year of my life. I'd like to thank James for such a tough match and congratulate him on having a strong end to the season."
The latest duel between Matthew and Willstrop was their eighth of the year and came only a week after Matthew became the first Englishman to win the World Open title with a comfortable 8-11 11-6 11-2 11-3 victory over his 27-year-old rival in Saudi Arabia.
"This tournament means a lot to me, because the ranking points involved will now make it possible for me to end the year as world No 1," added Matthew.
"I have very fond memories of the Sirifort Complex where I won two gold medals during the Commonwealth Games."
There was further good news for English and Yorkshire squash in the women's draw when Harrogate's Jenny Duncalf also ended the year on a high with victory over Australia's Kasey Brown.
Both players had survived hard-fought five-game semi-finals – Duncalf coming through against rising French star Camille Serme and the New South Wales-born Brown stemming a fightback by up-and-coming Hong Kong player Annie Au.
But world No 2 Duncalf – top seeded for the event – was in sparkling form in the final against an opponent who beat her in October's World Open in Egypt, romping through to triumph 11-5 11-5 11-4.
"I'm extremely happy to have finished the year on such a high note," said 28-year-old Duncalf after netting the ninth WISPA Tour title of her career.
"It's been a tough year so I think I'll be looking forward to a relaxing festive period."