Mohammad Rafi headed in the opening goal for the hosts in the 37th minute of the match from Mehtab Hossain's corner.
But the eventual champions were quick to respond as defender Henrique Sereno scored an identical header at the stroke of halftime.
The second half witnessed multiple missed chances from either side which took the game to extra time. Even the extra 30 minutes of football was not enough to separate the two sides.
Star ATK player missed the opening penalty after Antoine German had converted for Blasters. But Debjit Majumder proved to be the real hero for the champions who saved Kerala's final shot.
Jewel Raja Sheikh netted the winning goal gifting ATK their second title in 3 years.
Here are some photos from the match:
Champions Atletico de Kolkata
Atletico de Kolkata crowned ISL 2016 champions after they defeated Kerala Blasters in the final.
Atletico de Kolkata players run in ecstasy
Atletico de Kolkata players run in ecstasy after Jewel Raja scored the winning penalty.
Debjit Majumder saved Kerala's final penalty in an acrobatic manner.
Atletico de Kolkata dressing room
Atletico de Kolkata players celebrate inside the dressing room after winning the ISL 2016 title.
Sourav Ganguly with the ISL trophy
Atletico de Kolkata co-owner Sourav Ganguly with the ISL trophy.
Jewel Raja celebrates after netting the winning penalty for Atletico de Kolkata.
Guard of honour for Kerala Blasters
Atletico de Kolkata gave guard of honour to Kerala Blasters players after the final.
Kerala Blasters players thank their fans
Kerala Blasters players thank their fans after the match.
Atletico de Kolkata players celebrate with coach Jose Molina.
Jose Molina (left) and Steve Coppell
Jose Molina and Steve Coppell exchange courtesy after the match.
All images are taken from ISL Twitter handle