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The 3-1 win at Solitude means David Healy's Blues finish the campaign two points ahead of Crusaders who had held the title for the last two years.
Crusaders ended their title challenge with a 6-1 win over Glenavon at Seaview but in the end it was not enough.
It is Linfield's first title triumph since they did the double in 2012.
They are one match away from another double as they face Coleraine in the Irish Cup final on 6 May.
Linfield may have lifted the County Antrim Shield in February, but this will go down as a first major managerial success for Northern Ireland record scorer David Healy.
He took over as Linfield manager in October 2015 and saw his team end the season runners-up in the league and beaten by Glenavon in the cup final.
Clinching the title in his first full season seemed unlikely in mid-February when Crusaders were nine points ahead.
But Linfield went on an amazing run picking up 43 points from a possible 45, to take advantage of Crusaders' slip-ups.
Linfield were trailing at half-time after Daniel Hughes headed Cliftonville into a 13th-minute lead but Linfield bounced back in style after the break.
Waterworth pounced for a close-range equaliser and followed that with a brilliant individual strike which turned out to be the title clincher.
The former Glentoran striker made it 3-1 on the hour with a penalty after he was fouled by Chris Ramsey who was sent-off.
With Cliftonville losing, Ballymena's draw against Coleraine lifted them into fourth place, meaning they will have home advantage against Dungannon in the semi-finals of the Europa League play-offs.
Cliftonville will host Glenavon in the other semi-final, with the matches being played on Monday, 8 May.
Carrick are seeking a new manager as they prepare for the promotion/relegation play-off games after Aaron Callaghan quit minutes after their 4-1 defeat away to Ballinamallard United.
Andrew Waterworth scored a second-half hat-trick as Linfield beat Cliftonville to clinch the title on a dramatic final day of the Irish Premiership season.