Khachanov became the third different first-time victor of a Masters tournament this year - joining John Isner and Juan Martin del Potro- and denied Djokovic a fourth title in a row ahead of his return to world number one on Monday. "I couldn't be happier to end the season like this, to win against Novak Djokovic, the number one in the world".
It was a hugely disappointing day for 25-year-old Thiem, who had reached the French Open final in Paris in June but who is still searching for the first Masters title his talent merits.
Khachanov added this title to the Kremlin Cup in Moscow last month for his third title of the year and fourth overall.
Constantly keeping the master of defence on the back foot, he converted a decisive break point at 5-5 with an irretrievable backhand at full stretch before taking the set in 57 minutes.
Novak Djokovic of Serbia has overcame Swiss maestro Roger Federer in 3 sets, to book his spot at Paris Masters final.
Khachanov, a strapping 1.98-metre huge hitter with surprisingly fleet movement around the court for such a big man, took advantage of Djokovic being a little under the weather after a week struggling with flu-like symptoms.
Coming into the match, all attention was on Djokovic's bid for a record-tying 33rd Masters 1000 title and 23rd straight match win, but it was Khachanov who extended his own run of 11 wins in 12 matches.
'I want to talk about how well he played all week.
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"Karen played really well and he deserved to win", Djokovic said.
"So all the credit to him".
The 22-year-old, ranked at number 18 in the world, simply refused to allow the new world number one to settle in the showpiece encounter. "I know I have fans here, I can't complain", Federer said.
The composed Khachanov maintained his momentum, breaking to lead 2-1 when Djokovic put a backhand into the net and showing lightning sharp reactions to put away a volley at the net as he continued to put the favourite under pressure.
"After that, my intensity (changed), I stepped in more inside the court, started to move him and maybe he didn't expect that", said Khachanov, who did not give up another break point in the rest of the match with his pinpoint, heavy serving.
"The second thing is after some tough loses against top guys like Rafa in NY, I think they push me to the limit and even to work more harder".