For most of the match Li was in the driver's seat - from 3-4 in the first set she won seven of the next eight games to build a 64 41 lead. The No.5-seeded Peng made a big push from there, reeling off four games in a row to lead 5-4 in the second set, but the No.1-seeded Li hung on, sneaking out three long games of her own to close the match out in straight sets after an hour and 49 minutes, 64 75.
Li collected the eighth WTA title of her career, and first since winning this same tournament last year.
"I'm very happy to be able to defend my title for the first time," Li said afterwards. "I'm also very happy because I proved I could do it - everything is really moving forward in the right direction.
"After this tournament I'm going to Melbourne to prepare for the Australian Open."
And though she won her first Grand Slam title at the French Open, the Australian Open may be an even better tournament for the World No.3 - she has reached the semifinals or better there three times and has more wins at that major than any of the majors (27 - she has 20, 17 and 17 at the other three).
And there was another special thing about this victory for Li - almost eight years ago she came out on the losing end of the first all-Chinese WTA final, having to retire against Zheng Jie in the final of Oeiras in 2006 due to heat illness. Now, in the second all-Chinese WTA final, she came out a winner.
Peng was looking for the elusive first WTA title of her career. She is now 0-6 in WTA finals.
The doubles final took place later on, with Monica Niculescu and Klara Zakopalova battling past the Kichenok twins - Lyudmyla and Nadiya - in straight sets, 63 64. Niculescu and Zakopalova won their first WTA doubles title together and each of them won their third individual WTA doubles title.
The Kichenok twins were trying to become the second pair of twins to win a WTA doubles title together. The first twins to achieve the feat were the Pliskova twins - Karolina and Kristyna - at Linz last fall.
Despite the loss, the Kichenoks were thrilled with their week. "It's been a great tournament for us," Nadiya Kichenok said. "The fans have been great and we hope to come back again and win next time."
"This city is very impressive," Lyudmyla Kichenok said. "When we were here last year we liked it too. The city is great and has a really good infrastructure. We really want to come back again!"