Kerr, who was named Player of the Match and Player of the Tournament, top-scored with 43 as New Zealand posted an imposing 158-5 in their 20 overs.
The Wellington native then took 3-24, crucially picking up the key wickets of Laura Wolvaardt and Anneke Bosch, to restrict South Africa to 126-9 in their 20 overs.
"We all know she is a once-in-a-generation player," said New Zealand captain Sophie Devine.
"What she was able to do tonight was incredible. Physically to do what she did with the bat, I think she can't feel her legs.
"She is not a bad cricketer but the person that she is, the world is her oyster."
The victory marked a sweet finish to Devine's own career.
The win came 14 years after the White Ferns lost to Australia by just three runs in the 2010 final. They also lost to England in the 2009 championship match.
It also marks a remarkable change of form as they had lost 10 T20Is coming into the tournament. They had won just five of their previous 22 before their eye-catching win over India in their opening game.
"I started to dream last night about what it feels to hold the trophy with this team," said Devine.
"The great thing about this group is we know what we have been trying to achieve in the last 15, 18, 24 months.
"We kept taking steps in right directions, you want momentum and we came to the World Cup on the back of 10 successive losses. But everyone starts on zero."
For South Africa, who demolished six-time winners Australia in the semi-final, it made for a double disappointment having lost last year's final to the Aussies in Cape Town.
"Our focus was just to reset, not get too ahead of ourselves," said skipper Wolvaardt.
"We knew that we still had a really quality opponent in New Zealand to go and yeah, we just didn't play our best cricket tonight."
After being put in to bat, the New Zealand openers began aggressively with Suzie Bates, playing in her 334th international, making a rapid 32.
When Devine was leg before to Nadine de Klerk on review, the innings appeared to be faltering but the arrival of Brooke Halliday lifted the tempo as she added 57 in seven overs with Kerr for the fourth wicket.
Halliday hit three boundaries in her 38 but was dismissed when she picked out Bosch on the midwicket boundary.
Kerr slammed back-to-back boundaries off Mlaba before finding Tazmin Brits to fall for 43 from 38 balls.
Maddy Green, however, maintained the momentum with 12 off six balls including the only six of the innings.
Wolvaardt (33) and Brits (17) got South Africa off to a roaring start bringing up the 50 in the seventh over before three wickets fell in quick succession.
Brits was caught by Green at long-on before Kerr in her second over removed both of South Africa's main batters, Wolvaardt for 33 and Bosch, who had played so well in the win over Australia
South Africa had slumped to 64-3 and New Zealand were in command.
With the required run rate rising, South Africa's middle and lower order, who have barely batted in this tournament, struggled to get going with wickets tumbling at regular intervals.
Kerr took a catch to remove Nadine de Klerk and then claimed a third wicket when Bates, arguably the outstanding fielder at the tournament, took her third catch of the innings to remove Annerie Dercksen. Kerr finished with a tournament-leading 15 wickets.
Fast bowler Rosemary Mair made her presence felt with 3-25 as the tail folded.
The last pair held out for the final over but could not prevent New Zealand from celebrating their first title.
The victory completed a memorable day for New Zealand cricket after the men's team clinched a first Test win in India for 36 years earlier Sunday.
