It was the first title in 15 months for the sixth-seeded German, who improved to 6-7 in finals.
''Winning here is very special for me,'' said Kohlschreiber, who lives in Kitzbuehel. ''That's the crazy thing about tennis. I've been working hard this season but lost many close matches that hurt me. But now I am super happy.''
Overcoming a slow start, the 39th-ranked Kohlschreiber dropped just three points on serve in the second set and used two more breaks to win the last four games of the final set.
''I wasn't loose enough and played too many short balls in the first set,'' Kohlschreiber said. ''I managed an early break in the second set, and that helped me to find my rhythm.''
Coming back from injuries, the 109th-ranked Mathieu was looking for his first title in eight years and fifth overall. He hasn't beaten Kohlschreiber since 2003.
Mathieu last won a tournament in Gstaad in 2007. Formerly ranked 12th, he suffered from injuries and missed the entire 2011 season with left knee problems.
''It's great to be back in a final,'' the Frenchman said. ''It has been so long.''
Mathieu's defeat left Rajeev Ram the only player from outside the top 100 to win a title this season. The 161th-ranked American won in Newport in July.
The Generali Open was the final clay-court tournament of the season.