The American had never reached a final on Tour, but the world number 47 won at the first time of asking in a 6-3 3-6 7-5 triumph at the WTA Premier grass-court event in Eastbourne.
It wraps up a memorable week for Keys who finishes preparations for Wimbledon in perfect fashion.
Keys had not dropped a set in her previous four matches, and had accounted for the fall of third seed Jelena Jankovic and reigning champion Elena Vesnina.
Keys' victory was aided by 60 winners, of which 17 were aces, and she moved ahead for the first time in the match when she broke in just the fourth game to take a 3-1 lead.
The rest of set stayed with serve as Keys took the initiative, but Kerber - seeded fifth for the tournament - appeared to have swung the match back in her favour when she broke at the first opportunity in the second set.
Having levelled the match at one set apiece, the German then had a great opportunity at 5-5 in the decider when Keys was 0-30 on her own serve.
However, she dug deep to claw herself out of that hole meaning Kerber had to serve to stay in the match.
The 2012 runner-up was unable to do so, leaving Keys to bask in her maiden WTA success.
The 19-year-old can now switch her attentions to Wimbledon, where she meets Monica Puig in the first round, and is looking to beyond the third round for the first time.
Meanwhile Kerber, who finished runner-up in 2012 at Wimbledon, opens against Urszula Radwanska.