Li, who became China's first superstar tennis player after winning the 2011 French Open, took the first set 3-6, dominating the World Number One Azarenka on the hard court with her serving and groundstrokes.
Azarenka sprung to life as the hot Thai sun faded and the flood lights came on, belting a series of winners as she claimed the second set at a canter 6-2.
But the Australian Open champion, who secured the top ranking when she beat Li in October at the WTA Championships in Istanbul, stumbled in the play-off making a costly series of unforced errors while Li plugged away, probing from the baseline.
"I can beat Azarenka, I think this win makes it around the same for each of us... so we are on a similar level," the world number 7 Li joked after the match, which ends a mixed year that saw her win just one singles title.
The Belarusian Azarenka, who flies to Brisbane from Thailand to prepare her Australian Open defence, conceded she could have been better prepared for the match -- which was her second appearance at the invitational.
"I was a bit surprised by the surface... I should have practised a little bit more. It was really competitive today, I am really glad to be back and I can't wait to the start of the season," she said.
Azarenka has experienced a huge reversal of fortunes in the last year or so, banishing doubts over her future in the sport with a crushing win over Maria Sharapova in Australia to kick-start a season in which she topped the world rankings.
Li has struggled with consistency since becoming Asia's first Grand Slam-winner at the French Open last year, but finished the season strongly after changing coaches following a disappointing first-round exit at the London Olympics.