The 29-year-old is the first British man to finish in pole position since the inception of the ATP rankings in 1973.
Murray produced a superb display to defeat Djokovic 6-3, 6-4 in the final at London's O2 Arena and guarantee he would remain above the Serb in the last rankings of 2016.
The 29-year-old is the first British man to finish in pole position since the inception of the ATP rankings in 1973 and the first player other than Djokovic, Roger Federer and Rafael Nadal to end the year top since Andy Roddick in 2003.
It caps an incredible 11 months for Murray, who won Wimbledon for the second time, claimed a second Olympic gold medal and became a father for the first time.
"Right now to finish the year like this, this is the best possible way, obviously," he said.
"It was just a huge match to try and finish number one. This is a major event and one I've not done well in in the past, so it's been a great week.
"It was a big, big match against someone that would be my main rival really throughout my career.
"We played in all of the Slam finals, Olympics, and now a match to finish the year number one. It was obviously a big match, a very important win for me. "
Just 24 hours after he played the longest match in tournament history to beat Milos Raonic in three hours and 39 minutes, Murray looked surprisingly fresh and he admitted it was crucial he got ahead quickly to avoid being dragged into another draining encounter.
"I felt tired. I didn't feel great this morning, just a bit sluggish, a bit heavy-legged," he said.
"Thankfully the first seven games, there was no long rallies really at all, which for us is strange.
"It wasn't really until the middle of the second set when the rallies started to get extended and longer that my legs were starting to feel it.
"That's why it became harder to close the match out because I knew the longer the match went, the worse I was going to feel, and probably the better he was going to play, too. "
Having lost 13 of his last 15 matches against Djokovic, including the Australian and French Open finals this year, Murray said it was extra special to achieve his double success against his old rival.
"I have massive respect for everything that he's done, for him as a player," Murray said.
"It's a match-up that over the last couple of years I lost a lot of the big matches against him. This one was a big match and I managed to get over the line.
"I was lucky I got it finished in two sets. I don't think that was one of Novak's best matches. I was solid enough when I needed to be. I didn't make those mistakes."
Djokovic had no complaints and admitted he had been well below his best in a lethargic performance that included 30 unforced errors.
"I just played very poorly and made a lot of unforced errors from the backhand side. It just wasn't my day," Djokovic said.
"Credit to Andy for being mentally tough and playing the right shots, making me play extra shots in every rally. He definitely deserved to win.
"Even though he has had very long matches, especially the one yesterday, people were thinking maybe he's going to be slightly tired, but he didn't seem so."