Left-back Mustafa Kizza's second half strange goal is all that KCCA needed to dethrone Azam and lift their first Cecafa Kagame Cup trophy for the first time in 40 years.
Kizza sent the Kigali Stadium into a frenzy yesterday night in the 63rd minute with a long-range effort past a hapless Azam goalkeeper Razak Abalora.
The victory saw the Ugandan Premier League champions pocket $30,000 (Sh3M) in prize money as the runners up received $20,000 (Sh2M).
This was a repeat of the Group B encounter in Huye where KCCA emerged winners (1-0).
Allan Okello thought he had given KCCA the lead only for his goal in the seventh minute to be disallowed for hand ball.
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Azam responded immediately with Idd Selemani combining well with captain Obrey Chirwa, but Selemani's glancing header went over the bar.
Sadat Anaku nearly punished the Tanzanians in the 21st minute, but his free header agonizingly bounced off target. Anaku was on the move again but he fluffed his shot after pouncing on the loose ball at the edge of the box.
Moments later, Azam goalkeeper Razak Abalora pulled off a brilliant save to stop Okello's shot in the area.
But after a series of raids, the Ugandans finally got the breakthrough in the 63rd minute through Mustafa Kizza's strange goal.
The left-back unleashed a long-range low shot that skipped off his two onrushing teammates to leave Abalora rooted.
Substitute Idd Kipagwile could have drawn level after ten minutes, but his effort was perfectly gathered by KCCA goalkeeper Charles Lukwago.
In an earlier match, Green Eagles from Zambia won the bronze medals after securing a 2-0 victory over Congolese side AS Maniema in the third-place playoff.
Edward Mwamba and Amity Shamende scored a goal each to secure the win for the invited Zambian side and $10,000 (Sh1 M) in prize money.
KCCA 1-0 Azam
Third place playoff
Green Eagles 2-0 AS Maniema