Pablo Hernandez netted the only goal of Tuesday's match in Santiago's Estadio Nacional, scoring with a shot on the turn after a free kick was lobbed into the area from the left.
The two teams had finished the Apertura championship level on points, forcing a playoff as goal difference is not used to settle the championship.
O'Higgins, founded 58 years ago and named after Chilean independence leader Bernardo O'Higgins, won the title despite not being able to play any matches in their own stadium which is being modernised.
Their matches were staged in Santiago instead, around 100 kilometres from their home city of Rancagua, where an estimated 15,000 fans gathered in the city's main square to celebrate the victory.
Chilean media said that an angry group of Catolica fans waited outside the players' entrance to the stadium and security officials had to intervene to prevent a clash between a member of the coaching staff and the supporters.