In front of a packed crowd of 7412 at the Lions' new Michael Voss Oval, the Demons kept the hosts goalless after quarter-time to prevail 2.7 (19) to 2.3 (15).
In what will likely be a fairytale send-off for captain and women's football pioneer Daisy Pearce, the Demons thwarted numerous attempts from the Lions to reclaim the lead in a frantic last quarter.
However, Brisbane failed to score in the final term as Melbourne's defence stood tall and denied the Lions a second flag.
It was a sweet redemption for the Demons after they lost last season's grand final to Adelaide in April.
"To do it here, to have to come up here to Brisbane (and play the grand final) and wear the disappointment of that, it lasted about a nanosecond amongst this group," Pearce told the Seven Network
"It was like we don't care where we're playing, we're playing in a grand final and we're going up there to win - and they invited the wrong team to their house-warming."
However, Pearce would not be drawn on her future plans, but the expectation is she will retire.
"I've felt uncomfortable the whole time, the narrative, it being about me, I feel like that's a glorified thing that happens outside of these four walls," Pearce said.
Electric forward Dakota Davidson got the Lions off to the perfect start when she converted a set shot eight minutes into the game.
Cathay Svarc doubled the Lions' score just minutes later, making no mistake with a shot from 30m out.
But the Demons controlled the match after that, slowly working their way back into the contest before taking the lead six minutes into the third quarter.
Tayla Harris, who played the inaugural AFLW season with the Lions, stepped up in her fourth grand final appearance.
She kicked a vital goal in the third quarter after marking in the Demons' goal-square.
Eliza West and dual All-Australian Olivia Purcell were tremendous for the Demons, while Blaithin Mackin kicked Melbourne's only other goal.
"I think we just got the balance right with what we wanted to focus our attention on this season," Demons coach Mick Stinear said.
"We've always a special group of humans, talented footballers ... but we've never been out of leverage it from a performance point of view and I just feel like this season we actually we got it right."
Lions captain Breanna Koenen went down with a knee injury in the second quarter but returned to the field after halftime to play-on through significant pain.
Lions speedster Nat Grider evoked memories of Collingwood's Heath Shaw in the 2010 men's grand final when she produced a diving rundown tackle on Megan Fitzsimon to stop the Demons from scoring their first goal late in the opening term.
In an outstanding defensive display, Lions brickwall Shannon Campbell was brilliant and single-handledly prevented Melbourne from scoring more.
Campbell was awarded the best-on-ground medal, collecting an equal game-high 19 possessions and grabbing eight marks.
The 26-year-old was feeling ill post-match and was unable to complete her media obligations.
Lions coach Craig Starcevich believed his team was only just getting started and predicted big things to come.
"We're proud of them," Lions coach Craig Starcevich said.
"In seven seasons, we've played in four grand finals ... the win-loss ledger is not great but the competitive showing up and having a crack is pretty impressive."
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