The Russian dug deep to claim a 4-6 7-6 (7-2) 6-4 victory over world number three Thiem at the O2 Arena.
Thiem led the second-set tie-break but Medvedev reeled off seven points in a row to force a decider and came through a tight final set to ensure victory.
It was the Russian’s biggest title of his career and he defeated the three highest-ranked players to achieve the feat.
Medvedev, 24, who defeated Rafael Nadal in the semifunal in like manner, fought from a set down to beat the US Open champion, claiming a 4-6 7-6 (7-2) 6-4 victory.
World number three Thien led the second-set tie-break but Medvedev reeled off seven points in a row to force a decider and came through a tight final set to ensure victory.
This would be the last year the tournament was being held in London, with the event moving to Turin, Italy, from 2021.
Despite the loss, Thiem can still reflect on a solid year in which he has reached two Slam finals, losing to Djokovic at the Australian Open before claiming his maiden major title in the US Open.
