The overall World Cup holder and leader skied a perfect second run to clinch his fifth slalom victory of the season in a combined time of one minute 44.34 seconds.
Victory was all the more important for Hirscher as it was his first win in the stronghold of Austrian skiing while he became the first skier from his country to win the Hahnenkamm slalom since Manfred Pranger eight years ago.
The last Austrian to have won in Kitzbuehel was downhill specialist Klaus Kroell in 2009.
"It's a kid's dream I have achieved today, this race is huge, I'm really incredibly happy", he said.
Hirscher now leads Norway's Aksel Lund Svindal, his closest rival in the race for the big globe, by 154 points on 1,035 points.
Germany's Felix Neureuther, the winner in Wengen last week and was second and Croatia's Ivica Kostelic third. Kostelic won the classic combined, adding up the times of Sunday's slalom and Saturday's downhill.
The leading trio was the same as in Wengen last weekend, a sign of what to expect at the world championships in Schladming in two weeks.
"I fought very hard as I knew Neureuther skied another great run. It was a nice rehearsal for the worlds for sure as the pressure almost can't be bigger there," Hirscher added.
Hampered early this winter by a lingering knee injury, Kostelic is reaching his peak right on time for the word championships and could be a serious threat in Schladming, especially in the combined, a race he relishes.
"It's a great honour and pleasure to be on the podium again next to Hirscher and Neureuther like in Wengen, it's pretty exciting.
"I am also very proud to have won the classical combined again here, I hope it's not the last time it took place," the Croatian said.
The International Ski Federation is planning to drop the Kitzbuehel combined event next season.
"I can't imagine this combined going away as it's such a big part of skiing history. In a few years I'll be away and so will (men's World Cup director) Gunter Hujara but it will not be possible to bring the classical combined back. It's been around since the 1930s," Kostelic added.
Kostelic finished ahead of Frenchmen Alexis Pinturault and Thomas Mermillod Blondin for his fourth back-to-back victory in the Hahnenkamm combined event.