Exciting striker Troy Parrot scored the winning spot kick in a tense shoot-out after the sides had finished 0-0 after extra time.
In all, this is the DDSL's 30th success in 40 years of the Kennedy Cup competition. The DDSL were regaining the title won by the Kerry League 12 months ago.
The DDSL created the better of the chances during normal time, with Karl O'Callaghan's fine header on 17 minutes crashing against an upright, while penalty shoot-out hero Parrot headed just over shortly before half-time.
Galway grew more into the game in the second period and Colm Cunningham was only prevented from giving the Connacht side the lead by an excellent save from the DDSL 'keeper with four minutes remaining.
As the stalemate prevailed through extra-time, the decider went to a penalty shoot-out with the DDSL converting four of their five spot kicks, while Galway managed to score just three.
It was tough luck on a brave Galway side, but on the evidence of the five days of keen competition, the DDSL were deserving winners, scoring 10 goals and conceding just one in their six games.
Elsewhere, the Cork League claimed a third-placed finish with a 4-2 win on penalties over the NDSL in their play-off clash.
The game had finished 1-1 after normal time. Ope Abiru put the Dubliners in front in the first half, while Robert Geaney-O'Brien equalised for Cork late on.
In the Plate final to decide fifth and sixth place, the SDFL beat Wexford on penalties after the game finished 1-1 after extra time.
Kilkenny won the Bowl final beating Midlands 1-0, while Mayo beat Longford 5-3 in the Shield final to claim a 17th-placed finish in the 32-team competition.
The Trophy final went the way of Limerick District who defeated Dundalk 3-0.
Kennedy Cup Day 5 Results:
Trophy Final (25th-26th positions)
Limerick District 3, Dundalk 0;
Shield Final (17th-18th positions)
Mayo 5, Longford 3;
Bowl Final (9th-10th positions)
Kilkenny 1, Midlands 0;
Plate Final (5th-6th positions)
SDFL 1 Wexford 1 (aet) (SDFL win on pens)
(3rd-4th place play-off)
Cork 1, NDSL 1 (Cork win 4-2 on pens)
Kennedy Cup final 2016
DDSL 0, Galway 0 (aet) (DDSL win 4-3 on pens)