Stophira Sunzu scored the deciding sudden-death penalty after Gervinho missed his spot kick for Ivory Coast.
It's Zambia's first African title and came, poignantly, in the same city where nearly the entire national team was killed in a plane crash in 1993 in the country's worst sporting disaster.
Ivory Coast captain Didier Drogba had missed a 70th-minute penalty for the title favorite to send the dramatic decider to extra time and then a shootout.
After both sides made their first seven penalties, Ivory Coast's Kolo Toure had given Zambia a first chance at victory when his effort was saved. But Kalaba Rainford sent his effort high over the crossbar to give the Ivorians renewed hope.
But Gervinho faltered as well as the Arsenal winger missed the target, and Sunzu made no mistake when it was his turn, drilling his penalty to the right of Boubacar Barry for the title-clinching moment.
He raced toward the team's fans behind the goal to celebrate a highly emotional victory for the Zambians, who had pledged to return to Libreville and win their first major trophy to honor the 25 people who died in that plane crash nearly two decades ago.
The Gabonese fans were also won over, chanting ''Chipolopolo,'' the Zambian team's nickname, at the end.
Drogba hit his regular-time penalty over the crossbar after Gervinho was fouled, and then looked up at the sky in frustration. Even though the Chelsea striker scored in the shootout, Ivory Coast failed to end a 20-year wait for a second African title despite being the continent's top-ranked team. It was the Ivorians first loss in six games at this tournament.
Zambia captain Christopher Katongo hit the post in the opening five minutes of extra time but the underdogs were hanging on at the end, as Max Gradel sent a shot agonizingly wide in the 88th for Ivory Coast.
Emmanuel Mayuka was denied a goalscoring opportunity for Zambia by Kolo Toure's desperate tackle with the forward clear on goal in a frenzied finish to the 90 minutes.
In the first half, Zambia's players appeared determined to entertain the fans at Stade de l'Amitie, trying backheels and tricks in freeflowing, almost carefree style.
Nathan Sinkala should have had Zambia ahead early as a slick move from a corner opened a chance for him in just the second minute, but his scuffed shot was saved by Boubacar Barry.
Musonda tried to shrug off an early injury in what was meant to be a memorable 100th cap for him, but he couldn't continue. The veteran defender was in tears as he left the field in the 11th minute and was consoled by teammates and opponent Drogba.
Zambia kept pushing forward, with Emmanuel Mayuka sending a looping header onto the roof of the net in the 14th and Rainford Kalaba's deflected free kick flying just wide of the right post.
The Ivorians began to find their feet as the half progressed, and Drogba set up Yaya Toure with a classy backheel. The midfielder pulled his right-footed shot wide by inches from in front of goal with keeper Kennedy Mweene rooted to the spot and beaten.
Zambia coach Herve Renard's intensity boiled over as he pushed his own defender Davies Nkausu as he shouted instructions to him on the sidelines. Nkausu nodded and agreed with his coach's forceful directions, patting the intense Frenchman on the shoulder.
Gervinho continued to trouble Zambia down his right wing as the second half began quietly before Katongo suddenly lifted the Zambians - and the crowd - with a weaving run. Ivory Coast's strong defense held firm after a series of corners.