The win means Otago Boys' will play Christchurch Boys' High School in the South Island secondary schools final in Christchurch this weekend.
Yellow cards to Hemaua Samasoni and Alex Frood meant the home team played 20 minutes of the match a player short, and Otago Boys' needed a mighty defensive effort to hold off the Southland side.
''That's what this team is about,'' Otago Boys' coach Ryan Martin said after his side's 54th straight win in the competition since 2011.
''They have got massive ticker across the paddock and showed huge character.
"Two guys off the field for 20 minutes is tough enough in a normal game, let alone a grand final.''
Martin expected a tough challenge from Southland Boys', which his team beat by a combined 13 points in their first two meetings this season.
''Southland are an amazing team. The only games they have lost this year are to us.
"This was kind of like a three-test series. For us to continually beat them says a lot about us.''
Lock Jarrell Pattison scored the only try of the match for the home side in boggy conditions.
He barged over the line after a perfectly executed lineout drive to put Otago Boys' 13-0 up after 28 minutes.
The visiting side got on the board with a penalty shortly after Frood was yellow-carded late in the first half for a late hit in touch, but Otago Boys' took a 13-3 lead at the break.
Southland Boys' had the better of the second half, consistently finding space down the left-hand flank.
After a prolonged passage of play on the Otago Boys' line, Samasoni was yellow-carded after his side infringed once too often defending its line.
Captain Shaun Stodart crashed over as Southland Boys' breached the seemingly impenetrable Otago Boys' defence and pulled to within 13-10 with 15 minutes remaining.
However, Tomkinson landed another penalty to made it a six-point game with eight minutes remaining and Otago Boys' held on for a tense win.
Two other Otago schools, John McGlashan College and St Kevin's College, celebrated their best respective finishes in competition history.
McGlashan beat King's High School 17-8 to finish third. McGlashan led 17-3 at halftime through Seveci Nakailagi and Nemo Gent tries.
Thomas Johnson kicked two conversions and a penalty.
Coach Mike Idour said he was ''over the moon'' with the result.
The match was an intense encounter, with each team losing a player to the bin and King's conceding a red card.
In Oamaru, St Kevin's capped a wonderful season with a 38-13 thumping of cross-town rival Waitaki Boys' High School to win the middle four final.
St Kevin's pulled away in the second half, after leading 14-8 at the break.
Fullback Alex Collier scored a hat-trick for St Kevin's, which will now play Burnside High School in Oamaru this Saturday for the South Island co-ed title.
Menzies College beat Mount Aspiring College in the seventh-eighth playoff. South Otago High School and Dunstan High School drew 29-29 in the bottom six final.
There was no provision for extra time, so South Otago was considered the winner, as it was seeded higher, and St Peter's College beat Gore High School 31-5.
- Robert van Royen
First XV final
The scores
Otago Boys' High School 16
Jarrell Pattison try; Sio Tomkinson 3 pen, con
Southland Boys' High School 10
Shaun Stodart try; Jahvis Wallace con, pen.
Halftime: Otago Boys' 13-3.
