The third-seeded Gauff secured the trophy without dropping a set after a 1hr 42min battle in the central Chinese city.
In the first final between the former doubles partners, Gauff erased multiple deficits in the second set to improve her head-to-head record against Pegula to 3-4.
The 21-year-old in the process became the first player in the Open Era to win her first nine hard-court finals.
"It was a great Asian swing," said Gauff, who reached the semi-finals in Beijing last week, before winning the Wuhan Open.
"I'm going to call JC out," she said referring to her coach Jean-Christophe Faurel.
"He originally didn't want me to come because I had a tough US Open, but I had to prove him wrong.
"I'm a very stubborn person so maybe he said that on purpose for me to have a good result here."
The pair had contrasting routes to the final, with Gauff dropping a mere 16 games while Pegula battled through three-setters in all eight of her previous matches.
Gauff won the first six points of the match and it set the tone for what was to come, as she leapt to a 3-0 advantage.
Pegula recovered from her slow start and went on the attack in game seven, breaking with a fierce backhand winner that helped her get back on level terms at 4-4.
It looked like the sixth seed had swung the momentum her way, but Gauff found a tiny opening two games later and broke to secure the opening set in 47 minutes.
Pegula had come back from 2-5 down in her deciding set against world number one Aryna Sabalenka the day before and was more than ready for another fightback.
Gauff has been reworking her serve with biomechanics specialist Gavin MacMillan since the end of August, and while her numbers have improved since she added him to her team, the shot remains susceptible to ebbs and flows during stressful situations.
The world number three double-faulted six times, allowing Pegula to break her twice for a 3-0 lead, then steadied the ship by getting both breaks back to draw level.
There was another exchange of breaks, Pegula inching ahead with a cunning drop shot and Gauff pegging her back thanks to winning 10 consecutive points.
Shortly after, Gauff raised her arms in celebration as a Pegula volley sailed wide on match point.