Obaid Al Taweela, the Al Ahli goalkeeper, saved Al Shabab captain Adel Abdulla's penalty to give his side the trophy.
Al Ahli win the Etisalat Cup after shoot-out drama
The teams were locked 1-1 at the end of regulation time after Grafite cancelled out Kieza's ninth-minute strike for Shabab.
Playing against each other for the seventh time this season and having shared the honours with three wins apiece, the two traditional rivals then went into penalties to decide the night's winner.
The Shabab captain Adel Abdulla missed his team's first kick as Al Taweela flew to his left to keep the ball out. Luis Jimenez, Achille Emana, Ahmed Ali, Grafite and Basheer Saeed all scored for Ahli as the Red Knights clinched their first title in three seasons.
The duel between Grafite, the tournament's leading scorer with 12 goals before the final, and Essa Mohammed was always going to be crucial in deciding the fate of the final.
Ahli's Brazilian striker landed the first jab barely seconds into the game, deftly flicking the ball past the Shabab centre-back and then racing through, but he shot into the goalkeeper.
Grafite broke free again in the seventh minute to meet Achille Emana's cross in the box, but his header went straight to the goalkeeper.
Two minutes later, Kieza did a lot better with his effort at the other end, giving Shabab an early lead.
The Brazilian striker, who had failed to impress since his arrival in January and is unlikely to continue into the next season, flew in from the far post to head home Ciel's free-kick, stunning the Ahli fans into silence.
The Olympic-bound Ahmed Khalil almost levelled the scores in the 36th minute, slipping the ball through Walid Abbas's legs before blasting it towards the goal.
Salem Abdulla, the Shabab keeper showed good anticipation, diving low for a good stop.
Khalil had the Ahli fans gasping again in the 66th minute, when his free kick curled just wide.
Before that, Grafite did manage to beat Abdulla with a back heel in the 55th minute, but he was off-side by almost a yard when Luis Jiminez, the Chilean playmaker, flicked the ball towards him.
In the 69th minute, Ahli were the beneficiaries of a penalty that looked harsh.
As Jimenez lined up a free-kick and the players darted around the box, Abbas was tugging at Yousif Mohamed's shirt and Lebanese defender made the most of it, falling to the ground.
The linesman called the foul and Ammar Ali, the referee, pointed to the spot.
Play was held up for the next two minutes as the Shabab players argued against the decision before Grafite levelled the scores from the spot when play resumed.
Ahli came close to sealing the fate of the game in regulation time itself, but Yousif Mohamed's header missed the mark by inches in the 86th minute.
Kieza had a great chance to settle the issue with 12 minutes of extra time left, when Mohammed Ahmed floated the ball into the box, but with only the Ahli keeper to beat, he failed to control the ball as he chested it down giving Al Taweela a simple collection.
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