"This is the biggest win of my career considering all the good players that were here," Granollers said. "In the last two years here I have played the best tennis of my life."
The 25-year-old Granollers dominated the first set between the two unseeded players with his serve-and-volley game.
Monaco found his baseline stroke and rallied to win the second set before saving three championship points in the decider to force a tiebreaker.
Granollers claimed his second title of the year when the Argentine hit wide to end the three-hour final.
"It was a great final that came down to a pair of shots," Monaco said. "At the start, I was a little uncomfortable with his game. Then until 3-1 in the third set I was in control, but he was able to turn the match around coming to the net and making some incredible drop shots."
Last year, Granollers beat Monaco on his way to an all-Spanish final, where he lost to David Ferrer.