With her mobility around the court in full display, Hingis negated Davenport's baseline power and won the season-ending tournament 7-5, 6-4, 4-6, 6-2.
It was Hingis's first victory in this $2m (pounds 1.24m) event and her first tournament title since the Italian Open in May.
Davenport ended an otherwise outstanding year on a sour note, losing the last match of the season for the second time. She lost the Chase Championships final to Gabriela Sabatini in 1994.
This was supposed to be Davenport's time, especially after she beat a resurgent Steffi Graf in Saturday's semi-finals. Instead, it was the 17- year-old from Switzerland who walked away with the trophy.
For 80 weeks, Hingis was ranked No 1, until Davenport took over the ranking after beating the teenager in the US Open final two months ago. Yesterday, Hingis gave notice that the battle for No 1 will continue next year.
For the most part, Hingis matched Davenport stroke for stroke in a power game and test of wills. But Hingis used drop shots to exploit Davenport's lack of speed and agility. She also occasionally sneaked to the net for volleys.
Davenport usually had only one card to play - to hit even harder from the baseline. But while she had 16 break points, she converted only four.
Hingis did only slightly better. But that was all it really took to win the 16-player tournament.
Hingis, who won the Australian Open in January, became the only woman this year to capture two of the sport's top five titles.