Djokovic is the first player in the tournament's 46-year history to take home the trophy four years in a row and he joins Pete Sampras and Ivan Lendl on five victories at the season-ending event.
Only Federer, with six Tour Finals crowns, has won the tournament more times.
The 11th title of Djokovic's astonishingly dominant campaign served as the perfect finale to arguably the best run by any male player in the Open Era.
Playing in a record 15th consecutive tour-level final, Djokovic delivered another masterclass to record his 82nd victory from 88 matches this year and bank the winners' cheque for $1.05 million.
“I'm very proud, together with my team, for the achievements of the season,” Djokovic said.
“It could not have been a better finish,” he said on the day that coach Boris Becker celebrated his 48th birthday.
“It's been a long season, but the best of my life,” said Djokovic
In dispatching Federer with such ease after an equally imperious semifinal win over Rafael Nadal, Djokovic showed why he has been able to move so far ahead of his rivals in a year in which he also won Wimbledon and the Australian and US Opens.
Meanwhile, Federer's defeat means Andy Murray is guaranteed to finish second in the year-end world rankings for the first time.
“I tried my best, I thought I played some great tennis all week and in the final, but Novak deserves the win today like so many times this year,” said 34-year-old Federer.
Djokovic and Federer have been the gold standard at the Tour Finals for over a decade, lifting the trophy 10 times between them in the last 12 years and making it to the final a combined 15 times.
Federer had ended Djokovic's 23-match winning run earlier this week with an impressive straight sets success in the group stage.
But although Federer held a 22-21 lead in his head-to-head record with Djokovic, ominously the 28-year-old Serb had taken the silverware in ten of their 16 career final meetings, including at Wimbledon and the US Open this year.
Federer gifted the trophy to Djokovic last year when the 17-time Grand Slam winner pulled out of the final just hours before the scheduled start to protect a back injury ahead of the Davis Cup final.
Djokovic had to work harder to take the title this time, but even so he gave the impression of hardly breaking sweat.
Nadal described Djokovic as “almost unbeatable” after he failed to earn a single break point against the Serb in the semifinals and Federer didn't fare much better.
After both players squandered a break point in the first two games, Djokovic started to click into rhythm in the third game.
He unfurled a sublime backhand crosscourt winner to bring up a break point that he converted thanks to another Federer miscue.
Federer could ill-afford to be so generous and the world number three was scowling in frustration again in the sixth game when another sloppy forehand let Djokovic off the hook on break point.
That kind of profligacy had cost Federer dearly in the US Open final and it was the same story this time.
Djokovic, so consistent on his groundstrokes, earned two set points when he put Federer in an awkward position with a searing backhand that the Swiss could only prod into the net.
Djokovic seized the opportunity with in typically ruthless style, driving a winner down the line to seal the set.
The Serb remained untroubled in the second set and stepped up the pressure in the eighth game to bring up three break points.
This time the crisis brought out some of Federer's best tennis and clawed his way back from the brink with a string of big serves and booming winners.
But it was too little too late.
At 4-5 down, Federer found himself under siege again and crumbled with a double fault on match point giving Djokovic one more memorable moment in his golden year.