The top-seeded Russian swept to her second title of the year after winning in Indian Wells, Calif. She became the first player to retain the Stuttgart title since Lindsey Davenport in 2005.
"I thought it'd be the toughest match of the tournament, but I played my best tennis today," Sharapova said. "I was able to step it up."
This was her 29th career title and 16th consecutive win on clay, dating to Rome last year. Since Stuttgart last year, she is 23-1 on clay. Her only loss was to Serena Williams in Madrid.
Sharapova, ranked No. 2, was using the Stuttgart tournament for her clay-court debut this season, as she did last year when she went on to capture the French Open.
The second-seeded Li had a double-fault on match point, with another one earlier in the final game.
"I was under pressure on her return," Li said. "She was aggressive."
Sharapova had to fight through three long three-setters to get to the championship match, but there was little drama in the final.
The Russian opened with a break and went up 4-1 before Li could pull back one break. But that was not enough, and Sharapova closed the set with a service winner.
"I tried to put it together from the start," Sharapova said.
Li, who became the first Chinese player to win a Grand Slam title with her victory at Roland Garros in 2011, simply didn't have enough consistency to threaten. Sharapova gained the key break in the seventh game of the second when Li sent a volley wide.
Sharapova holds a 9-5 career edge over Li, who beat her in the semifinals of the Australian Open, the year's first Grand Slam.
"I'm a little sad to lose," Li said. "But it's a pretty good start to my clay-court season."