The 24-year-old only needed to finish in the top 20 in the penultimate event of the season to be crowned World Cup champion with his lead over title holder Jason Lamy Chappuis 186 points.
However he was clearly in mood to settle for just that as he first placed second after the jumping before winning a head-to-head battle with Watabe as the finish line approached for the win.
Frenzel clocked a winning time of 26:11.5minutes for his second victory in a row and sixth of the season to follow Ronny Ackermann as the first German since 2008 to win the World Cup title.
Watabe was exactly five seconds back for a fourth successive finish of second and fifth of the season with only one race left for the Japanese 24-year-old to claim an elusive victory.
Younger brother Yoshito emerged from a three-strong chasing pack to finish third another 17.2seconds adrift with Lamy Chappuis taking fourth ahead of American Taylor Fletcher.
Frenzel was sandwiched in between the Watabe brothers after the jumping with his leap of 127.5m giving him 120.5 points for a deficit of eight seconds behind Yoshito who jumped 128.5m for 122.5.
Akito placed third with a total of 116.9 that gave him a 22-second deficit with Lamy Chappuis down in joint eighth 56seconds behind and Fletcher over a minute and a half adrift in 23rd.
The field grouped together during the cross-country ski however Akito and Frenzel were at the front when it mattered most before the German's greater stamina told towards the end.