The 28-year-old, who won the second of two events at the Olympic venue in Sochi last time out, appeared out of contention at the end of the first round after placing down ninth.
Kofler produced a jump of just 131m, good enough for a points total of 127.8, as Poland's Kamil Stoch scored 136.5 after a 132.5m leap for the lead with Gregor Schlierenzauer in second.
However the Austrian found form in round two and comfortably recorded the biggest distance of 136.5m for an overall total of 272.6 that saw him just deny Stoch his first win of the season.
Stoch leapt 134m in round two with his overall total coming to 272.5 while Kofler's rise also saw three-time Olympic medallist Schlierenzauer demoted into third with 268.1.
Severin Freund was three points behind in fourth to remain top of the World Cup standings with 390 with Schlierenzauer second with 348 and Kofler third with 316.
And Kofler admitted he was as surprised as anyone to have made the jump from ninth to first to win for the second year running in Engelberg.
"It was a perfect competition for me, especially the second with a really good jump," said Kofler. "I got it [the win] and it is really nice. To jump from ninth to first is something special.
"I am really happy with the success and I love Engelberg. It is really beautiful and it is always nice to come here. They have good chocolate, nice hills and everything is perfect."