Derry kicked the final four points of this Parnell Park decider to see off Kerry and lift their first NFL Division 1 title since 2000.
After a horrible start – they went 2-04 to 0-03 down – the Oak Leafers rallied with goals either side of half-time from Fergal Doherty and Conleith Gilligan.
Kieran Donaghy was influential as he set up Kerry's brace of goals for Donncha Walsh (2 minutes) and Darren O'Sullivan (23).
But the Kingdom dithered and had Colm Cooper red-carded as his 2007 All Star colleague, Paddy Bradley (0-06), helped Derry over the finishing line.
Derry manager Paddy Crozier said before the game that this tie would be an indicator as to how far his team have progressed this season.
On this showing, his strongly-built side will be real contenders for Ulster and All-Ireland honours this season.
Despite some notable absentees due to injury, All-Ireland champions Kerry were hotly-tipped to claim their third league crown in five seasons.
Pat O'Shea's side beat Derry by 0-10 to 0-09 in Killarney in the league's group stage last month and, on paper, they looked like they would have enough firepower for a repeat win.
For the counties' first league final meeting since 1961, both teams had to make late changes.
Team captain and full-back Kevin McCloy was a late withdrawal for Derry, with the burly Niall McCusker handed the onerous task of keeping tabs on Kieran Donaghy.
A hamstring injury picked up in a club game got the better of Kerry wing-back Tommy Griffin, meaning An Ghaeltacht clubman Ronan O'Flatharta started in his place.
The Ulster men may have pointed within 54 seconds of the throw-in - Eoin Bradley managed to score off his left under pressure from Tom O'Sullivan - but Kerry soon blasted ahead.
Just a minute later, a magnificent leap and quick hand pass from Donaghy put Donncha Walsh through on the goal and a measured finish from the Cromane forward gave Barry Gillis no chance.
The goal had much to do about Donaghy's superb fetch and reading of the attack. He had three defenders around him when he landed back on the turf but somehow managed to spot Walsh's run, slipping the ball away to his left.
Derry remained scoreless for the next 18 minutes as Kerry took almost complete control and neutrals in the crowd wondered if this would be a one-sided affair.
Mike Frank Russell, taking the frees in the absence of Bryan Sheehan, knocked a sixth-minute placed ball through the uprights for a 1-01 to 0-01 lead.
Paddy Bradley struggled to have an influence on the game in the early stages and he missed his first scoring opportunity, tailing a free away to the left.
On ten minutes, Donaghy was the provider again as he helped set up a point for Darren O'Sullivan who boomed a left-footed shot through the posts.
Defender Aidan O'Mahony did likewise in the 14th-minute and it seemed all too easy for Kerry as Eoin Brosnan added another point for a 1-04 to 0-01 buffer.
The Kingdom could have been further ahead at that stage but McCusker produced a brilliant block in the 15th-minute, snuffing out a goal-scoring chance for Walsh, after another catch and set-up by Donaghy.
The one-way traffic was halted when Eoin Bradley doubled his and his team's tally, scooping over a point after his brother Paddy had an effort blocked by Darragh Ó Sé.
Derry showed good character to keep in touch. Not much had gone their way up until that point but a Tom O'Sullivan foul on Paddy Bradley allowed Conleith Gilligan to pick off their third point.
Disaster struck though for Crozier's men, just moments later, when Kerry raced up the other end.
Seamus Scanlon's centre was tapped down by Donaghy and Darren O'Sullivan succeeded in finding the far left corner of the net with goalkeeper Gillis unfortunately losing his footing as the ball rolled by him.
Derry responded three minutes later when Paddy Bradley got the better of Marc Ó Sé and pointed, but a McCusker foul on Donaghy allowed Russell to point another free.
Yet, Derry managed to slice the gap to just two points by half-time with a sudden scoring burst of 1-02.
Doherty, the man-of-the-match, showed great race to race through from the right in the 32nd-minute. His hand pass found Barry McGoldrick and while the Derry centre-forward's shot was smothered by Diarmuid Murphy, Doherty latched onto the loose ball and netted despite there being three defenders near the Kerry line.
The goal gave Derry added determination and heart and they grabbed two more points in first half injury-time with Bradley rifling over off his right from play and then using his left to point a free after Scanlon had fouled Joe Diver.
Kerry needed to reassert their authority on the resumption but they failed to do so with their midfield being overrun and Derry were well able to take their scores.
They secured their second goal in the 36th-minute when Bradley pumped a huge ball in on top of the Kerry defence, 'keeper Murphy misjudged it and Gilligan palmed the loose ball home.
That major moved ahead for only the second time in the match, at 2-06 to 2-05.
Kerry were beginning to get frustrated with Tomas Ó Sé, their captain on the day, becoming the third Ó Sé brother to be yellow-carded, 40 minutes into the tie.
Two more frees from Russell put Kerry ahead and after two poor misses from Bradley and Gerard O'Kane, a wonderful 46th-minute effort from Darren O'Sullivan from the left had O'Shea's charges 2-08 to 2-06 ahead.
That was really as good as it got for Kerry as they were outplayed over the closing 20 minutes, with their final point coming from a trademark raid forward by Tomas Ó Sé.
They brought Cooper on, in place of an ineffective Declan O'Sullivan, but with little recent football in his legs, Cooper was largely anonymous.
A brace of points from Bradley tied up the game at 2-08 apiece before Bradley set up a well-executed point from substitute Paul Murphy.
With Sean Marty Lockhart, another substitute, helping to tie up things at the back, Derry were beginning to look the part.
Derry had a touch of good fortune in the 61st-minute when a long ball in from Gerard O'Kane bounced up and away from Murphy, off the crossbar and over for the lead point.
McCusker, relied of his defensive duties, sallied forward and landed a point from the right which left the Oak Leafers 2-11 to 2-09 ahead with seven minutes remaining.
A quickly taken free then allowed Michael McIver to push Derry further ahead. The Derry wing back will surely be part of a quiz question in the future as he was collecting a league winners' medal just twelve months after his father Brian managed Donegal to Division 1 glory.
With time not on their side, Kerry sought out Donaghy again. Darragh Ó Sé found him with a good pass but the Tralee giant's goal shot was blocked and substitute Daniel Bohane was penalised for picking the loose ball up off the ground.
Kerry queried referee Maurice Deegan's decision and Cooper earned his second yellow for back chat.
The final nail in Kerry's coffin came just seconds later when Bradley pointed from the right sideline to crown a memorable day for the men in red and white.
Commenting on the win afterwards, Derry boss Crozier said: 'At long last we've delivered a bit of silverware. You would have thought Kerry would have dominated after the early part of the first half but we knew we could get back at them.
'We came back at them and at half-time knew we were by no means out of it.
'Kerry were missing a few players but every team is beatable no matter how big they are and we are delighted with the win.
'We have waited eight years to win something, most of our players have not sampled this before and I'm really delighted for them.'
Derry: P Bradley 0-06 (0-02f, 0-01 sl), C Gilligan 1-01 (0-01f), F Doherty 1-00, E Bradley 0-02, P Murphy, N McCusker, G O’Kane, M McIver 0-01 each
Kerry: Darren O’Sullivan 1-02, MF Russell 0-04 (0-04f), D Walsh 1-00, A O’Mahony, E Brosnan, T Ó Sé 0-01 each
DERRY: B Gillis; K McGuckin, N McCusker, F McEldowney; L Hinphey, G O’Kane, M McIver; F Doherty, J Diver; M Lynch, B McGoldrick, E Muldoon; C Gilligan, P Bradley, E Bradley.
Subs used: SM Lockhart for McEldowney (34 mins), P Murphy for E Bradley (43), K McCloy for Hinphey (59), J Keenan for McIver (67)
KERRY: D Murphy; P Reidy, M Ó Sé , T O’Sullivan; T Ó Sé (capt), A O’Mahony, R O’Flatharta; D Ó Sé , S Scanlon; Declan O’Sullivan, D Walsh, E Brosnan; Darren O’Sullivan, K Donaghy, MF Russell.
Subs used: C Cooper for Declan O’Sullivan (47 mins), M Quirke for Scanlon, D Bohane for O’Flatharta (both 62), A Maher for Russell (67)
Referee: Maurice Deegan (Laois)