The teams were tied at 2-2 after 70 minutes of normal time, and two lots of extra time proved inadequate in separating the two sides.
Wily Black Sticks veteran Ryan Archibald got Auckland off to a good start in the penalty shootout, and Auckland maintained the lead to win the penalties 4-3, and the right to stow away the title for the third year in a row.
Southern had stormed into the final with a 4-0 win over Canterbury on Saturday, courtesy of a four-goal blitz from Hugo Inglis, while Auckland sneaked past Midlands 2-1.
Inglis, who was named the tournament MVP after scoring 14 goals, said he would have happily traded in his individual prize for a team win.
''It's a bit of a hollow trophy really; it's more about the team,'' he said.
''The boys have got so much character. It's an awesome team to be a part of. I'm really gutted we couldn't get the victory to show how much hard work everybody has put into it, especially down south.''
Auckland started the game strongly, keeping Southern in its own half for much of the first 15 minutes. Archibald engineered the first goal after 10 minutes, working a pass into the circle which Sam Miskimmin gratefully received and put past Southern goalie Hamish McGregor.
But Southern grew in confidence as the first half went on, with defender Blair Tarrant providing good service for his strikers.
''We worked our way back into the game and got the goal, and then I think we started to get the better of the game, and we controlled it pretty well.''
Southern went to the break 0-1 down, but Australian star Eddie Ockenden wasted no time in the second half, providing a reverse pass to Jeremy Morris, who finished off the move to bring the score back to 1-1.
Both sides defended well and fairly for much of the game, and it took until the 62nd minute for the first penalty corner to come.
Auckland duly delivered off the set-piece courtesy of Dwayne Rowsell to take a 2-1 lead, but Otago struck back within two minutes when Jason Dungey finished off a sweeping movement down the right flank to bring the score back to 2-2.
And that is where it stayed until the penalty shootout.
''It's never the best way to decide a final, but there's got to be a winner and a loser.
''I think the boys are all pretty knackered but it's still a pretty hard one to swallow.''
The Southern women finished their tournament in eighth place after losing 4-0 to Northland in the playoff for seventh place. Midlands won the women's final, beating Capital 5-0.
National Hockey League
The final
Auckland 2
Sam Miskimmin, Dwayne Rowsell
Southern 2
Jeremy Morris, Jason DungeyPenalty shootout: Auckland 4-3.
Halftime: Auckland 1-0.
