Daly shot 66 at the Golfclub Munchen Nord-Eichenried to end at an astounding 27-under-par 261, which - had it not been for lift-clean-and-place on Saturday - would have tied the European Tour record for most strokes under-par.
'It's been a long six years and it just feels good to win again,' said Daly following his performance.
The final round was back-and-forth all day between the final twosome.
Starting the day one shot ahead of Daly, Harrington had increased that margin to two through the first six holes after a birdie at the short par-4 5th.
Yet, Daly, whose last win came at the 95 Open Championship, came roaring back with the sort of flair that he had demonstrated all week.
Daly birdied Nos. 7, 9, 12 and 13 to pull even with the Irishman entering the final stretch of holes.
At the 319-yard water-laden par-4 16th, Daly surprised everyone when he pulled driver from his bag, but with a huge slash, put the ball right in the middle of the green, from where he would two-putt for birdie.
Harrington selected an iron off the tee, and he too surprised everyone, as his shot leaked right and nearly found a water hazard.
The ball stayed dry, however, and the crafty 30-year-old came back with a beautiful wedge shot from the rough to four feet, which led to a Daly-tying birdie.
He wasnt so lucky on the finishing par-5 18th, however.
After a fine drive, Harrington elected to go for the green in two, but again sprayed his shot out to the right towards more water.
This time, the ball would end wet.
Daly missed the green to the left, but played a gorgeous pitch to two feet for the closing birdie and the one-stroke win.
Click Here see John Daly's Final Round Scorecard.
Harrington, who ended with a 68 at 26-under, has now finished second for the sixth time this season on the European Tour. With two other top-5s on top of that, shooting minus-26 and still not getting victory this week surely comes with disappointment.
'Obviously at the start of the week I would have taken 26-under,' Harrington said following the round. 'It's nice to see Daly back in the winner's enclosure -- but it would have been nicer if I hadn't been in second place.'
For Daly, however, the win couldnt come as any more deserving.
The 35-year-old two-time major champion is in the midst of an incredible comeback from alcohol and gambling addiction, sponsorship losses and failed marriages.
Said the champion: 'I think 1999 was probably the low point in between times. That was the turning point, when I had to decide whether to keep going forward or do something else. It was a very short thought, because I wanted to keep playing golf.'
Now, he's not just playing again, he's winning.
Ryder Cup Notes:
While Daly ended somewhat an ironic champion, the week had been most highly-touted for the implications it could have on the upcoming Ryder Cup.
When it was all said-and-done, however, no changes to the top-10 were made.
Phillip Price, who missed the cut this week, and sat perilously on the 10th spot, but ended holding his position.
All week, several players outside the bubble made charges, but it was Thomas Levet who contended most seriously down the stretch.
Levet shot a beautiful 64 on Sunday to finish in outright third at 20-under, while another Ryder Cup hopeful Dean Robertson ended one shot further back with Raymond Russell and Christopher Hannell.
The performance just wasnt good enough for Levet, however, as the Frenchman needed a win to surpass Price for the final slot.
Click Here for for Full-Field Scores from the BMW International Open.