The winner was decided in a tie breaker after four hours on court.
Thiem also made history as the first Austrian to win the title.
He is also the second Austrian to win a Grand Slam title after Thomas Muster’s 1995 French Open title.
The 27-year-old world number three, beaten in his first three Grand Slam finals, started as favourite but appeared to have blown his golden chance as he fell two sets behind.
Thiem, who had dropped only one set en route to the final, looked stifled by nerves early on but gradually broke the shackles to hit back from a break down to take the third.
Zverev faltered on serve at 3-4 in a high-quality fourth set allowing Thiem to take the contest to a decider.
A limping Thiem trailed 5-3 in a high-quality decider but summoned some incredible baseline winners to take it into a nerve-jangling tiebreak.
An astonishing climax saw Thiem squander two match points from 6-4 but when a third opportunity came Zverev fired wide after four hours and two minutes.
“I wish there were two winners today, we both deserved it,” Thiem, said on court after a tearful speech from his crestfallen 23-year-old opponent.
Thiem had lost the last two French Open finals to Rafa Nadal and this year’s Australian Open final to Novak Djokovic.
This time he started as the favourite but needed to become the first player to win a Grand Slam title from two sets down since Gaston Gaudio at the 2004 French Open to end his wait.
Thiem is the first male player born in the 1990s to claim a Grand Slam and the first besides the big three of Nadal, Djokovic and Roger Federer to claim one of the majors since Stan Wawrinka won the 2016 U.S. Open.
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