With Els in the clubhouse following a nine under par 63, the third course record of the day, Mickelson parred the last to claim a second HSBC Champions title in three years and second WGC title of his career following March's CA Championship success.
Mickelson signed for a final round score of three under 69 to finish at 17 under par overall.
Fellow three-time Major winner Els will be left to rue his only bogey of the day at the 18th after hitting his approach into the water at the front of the green.
“It feels terrific to have won this tournament,” said Mickelson. “This has been a very special event to have a World Golf Championships here in China, and to be the champion feels great. This is my last event of the year. I won't play again until the end of January, and so to finish the year with this victory feels wonderful.
“Ernie played one of the greatest rounds, shot a course record, along with Rory and I was very fortunate to come out on top. This feels terrific because I had to fight very hard. Nothing came easy - I didn't hit it great. The putts weren't falling, and yet I hung in there and was able to win by one.
“The putt (on 16) was the critical moment for me. It was not an easy putt, it broke quite a bit and I had to feed it in from the side, and it was the best putt I made all week.”
Ryan Moore carded a final round 68 to finish two shots off the pace in third, with Rory McIlroy boosting his Race to Dubai bid after a brilliant 63 earned fourth at 14 under.
Nick Watney's final round 71 ensured fifth ahead of another Race to Dubai contender, Martin Kaymer (67), and an out-of-sorts Tiger Woods.
The world No1 began the final round two shots behind Mickelson in second, but a level par 72 left Woods five adrift and tied for sixth with Kaymer following runner-up finishes on his previous two trips to Shanghai.
Woods uncharacteristically missed several short putts, but his round was summed up at the last as he hit through the green and into water to ship a third bogey of the day.