Lars Stindl scored the opening and only goal of the match to give Germany the lead after 21 minutes. Borussia Monchengladbach forward tapped home against the run of play after a defensive blunder midway through the first half as world champions, Germany, added another major trophy to their collection.
Chile defender Marcelo Diaz gifted Timo Werner the ball on the edge of the box and the Germany striker ran on and turned the ball across goal for Stindl to tap into an empty net.
The referee failed to send off Chile's Gonzalo Jara after a clear elbow on Werner.
Chile dominated the match but found their route to goal blocked.
Despite dominating for long spells, Chile failed to turn 61 percent possession and 20 shots, compared to the Germans' eight, into goals.
The South Americans kept the same team which squeezed past Portugal 3-0 on a penalty shoot out after a goalless draw in the semi-finals.
Meanwhile, Germany's only change from the team which beat Mexico 4-1 in the last four saw defender Shkodran Mustafi replace Benjamin Henrichs.
Chilean fans turned the Saint Petersburg Stadium into a sea of red and merciless pressing by La Roja early on saw Charles Aranguiz and Arturo Vidal cause havoc in the Germany defence.
Eduardo Vargas had the first clear shot in the 11th minute which flew into the grateful arms of Germany goalkeeper Marc-Andre ter Stegen.
The South Americans then wasted a golden chance when Vidal's shot was blocked by Ter Stegen and Alexis Sanchez could not connect with the loose ball.
It proved costly as Diaz's calamitous mistake and Werner's quick thinking led to Stindl's match-winner.
Diaz dithered on the ball on the edge of his own box, allowing Werner to pounce. He then drew the lunging Bravo and squared to Stindl, who tapped home.
Having fallen behind, Chile upped the pressure to force an equaliser which left space at the back for Germany to counter-attack.
Draxler fired wide of the post, then Goretzka, who scored twice in the 4-1 semi-final win over Mexico, wasted a great chance by firing straight at Bravo just before the break.
Chilean tempers started to fray, and approaching the hour mark Joshua Kimmich squared up to Vidal, who pushed the German away. The Bayern Munich team-mates were both booked.
Then Werner was left clutching his jaw after an elbow in the face from Jara near the touchline, the Serbian referee deciding to award a yellow card to the defender after reviewing the incident.
The South Americans battered the German goal in the final 20 minutes but Sanchez's shot was blocked and Ter Stegen then saved from Vargas.
With time running out, both Vidal and substitute Angelo Sagal fired over the bar, as the German defence held firm.
Germany's young team passes tough test from Chile
Germany's young players got a rough guide to winning a major tournament and proved up to the challenge in a physical Confederations Cup final that threatened to boil over on Sunday.
A tough Chile side tried to intimidate the Germans in a forceful South American style not often seen in Europe.
Germany stood up to the test, defending an early lead for a bruising 1-0 win to accelerate its education ahead of its World Cup title defense.
"We've been literally fighting for every single ball, every single meter to defend our 1-0 lead," said Germany coach Joachim Loew, describing Chile as "very robust."
Loew's instinct to protect his players in an aggressive second-half led him 10 meters (yards) on to the pitch when Emre Can was crowded by a group of Chileans.
The coach earlier saw one of his most inexperienced players, forward Timo Werner, felled by the left elbow of Gonzalo Jara. The rugged defender got just a yellow card despite it seeming intentional on video replays that were reviewed by the match officials.
"I think if a referee sees that, he should and could have dismissed him," said Loew.
A testy six-minute, second-half spell for Germany's Joshua Kimmich saw the 22-year-old wing-back clash with his Bayern Munich teammate Arturo Vidal, get pushed by defender Gary Medel, whose nickname is "Pitbull," and tangle with Jean Beausejour.
"The South Americans are playing very tough," Germany defender Antonio Ruediger said.
Chile's physical tactics did not stop when play paused and a Germany player's game was over.
On being substituted late in the game, Werner and Leon Goretzka each got a shove to hurry them off by Medel and Jara, respectively.
A relative veteran at 23, Liverpool midfielder Can replaced Werner and soon got into a wrestling match with four Chile players.
Can's lone raid deep into Chile's half ended when he fell on the ball and held it tight. In the scramble that followed, Chile goalkeeper Claudio Bravo ran from his area to manhandle Can. Both were shown yellow cards.
The clash provoked Loew, who strode into the playing area trying to protect his grounded player, and was confronted by Medel.
"It's a final and that's the reason why the game is played at high intensity," said Chile coach Juan Antonio Pizzi. "The players are nervous on the pitch and it's difficult to control that sort of situation."
Pizzi might have been sent into the stands after furiously demanding a video review from the fourth official after star forward Alexis Sanchez went down in the penalty area.
Still, Germany's two games in Russia against the battle-tested South American champion can only help preparations to return next year and defend their world title.
At this Confederations Cup, Germany beat teams of different styles from four continents and avoided the two Europeans, Russia and Portugal.
"The guys are very young and we played as a team in all games," Ruediger said. "It was not easy."
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