Merrien reached her third successive final after winning the World Mixed Pairs Matchplay title earlier in the week with fellow Briton Simon Skelton. But, after taking the opening set, the 36-year-old from Vale stared defeat in the face when Murphy grabbed the second 11-0.
And the Australian ace continued her assault by taking the first end of the tie-break.
But Merrien stuck to her guns and calmly outdrew her opponent in the next two ends to claim a shock 9-5, 0-11, 2-1 title victory.
"My form hasn't been good recently and I came here not expecting to do anything," said the Channel Islander.
"Even when she raced away in the second set, I thought the set was still 'do-able', but it would be very hard.
"I tried to stay calm in the tie-breaks. I just had to dig deep and find a big bowl.
"I was really gutted after losing in last year's final – and really wanted to make it a good game this time," added Merrien.
"At the end of the match, it was very emotional. To win one title was brilliant - two is amazing!"
Murphy, winner of gold or silver medals in three successive Commonwealth Games from 1998, said: "I've had a great time on my first visit to Potters – it's been a ball.
"Ali's a fantastic player – I knew she was going to be a hard nut to crack," added the 36-year-old from New South Wales. "I'm really happy for her that she made it today.
"I'd love to come back again next year."
RESULTS: Potters Holidays World Indoor Bowls Championships, Hopton-on-Sea, England
Ladies World Matchplay Final:
Alison Merrien (GUE) bt Karen Murphy (AUS) 9-5, 0-11, 2-1
After finishing as runner-up for the past two year, it was third time lucky for Guernsey's Alison Merrien in today's final of the Potters Holidays Ladies World Matchplay Championship when she survived a blistering comeback by Australian Karen Murphy to beat the World Bowls Tour debutante in a tie-break shoot-out.
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