The 32-year-old Croatian cruised to a surprising 6-4 6-3 victory against the American top seed and wildcard Williams in Quebec City on Sunday.
It marked Lucic-Baroni's first WTA title in 16 years four months, a record for the biggest gap between crowns.
Lucic-Baroni, in her first final since 1998, trailed 3-1 before fighting back to win in one hour 23 minutes at the WTA International event.
"I'm so happy I can't really find the words right now to explain how happy I am," she said.
"I played such a great match today against one of the best players in the world, such a champion.
"It's been so long. I'm finally playing the great tennis I always knew I could play, but it had been so long that I kind of lost a little bit of the belief in myself.
"But now after starting with my new coach Julian Alonso, winning matches and really getting that belief back, I'm just so ready to keep going."
The gap between Lucic-Baroni's titles bettered the previous one of 13 years one month, held by Japanese veteran Kimiko Date-Krumm.
Seven-time grand slam champion Williams' final was the 75th of her career as her record in deciders slipped to 45-30 win-loss.
Lucic-Baroni also won the doubles title, alongside Czech Lucie Hradecka.