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The 3-1 win at Solitude means David Healy's Blues finish the campaign two points ahead of Crusaders who had held the title for the last two years.
Crusaders ended their title challenge with a 6-1 win over Glenavon at Seaview but in the end it was not enough.
It is Linfield's first title triumph since they did the double in 2012.
They are one match away from another double as they face Coleraine in the Irish Cup final on 6 May.
Linfield may have lifted the County Antrim Shield in February, but this will go down as a first major managerial success for Northern Ireland record scorer David Healy.
He took over as Linfield manager in October 2015 and saw his team end the season runners-up in the league and beaten by Glenavon in the cup final.
Clinching the title in his first full season seemed unlikely in mid-February when Crusaders were nine points ahead.
But Linfield went on an amazing run picking up 43 points from a possible 45, to take advantage of Crusaders' slip-ups.
Linfield were trailing at half-time after Daniel Hughes headed Cliftonville into a 13th-minute lead but Linfield bounced back in style after the break.
Waterworth pounced for a close-range equaliser and followed that with a brilliant individual strike which turned out to be the title clincher.
The former Glentoran striker made it 3-1 on the hour with a penalty after he was fouled by Chris Ramsey who was sent-off.
With Cliftonville losing, Ballymena's draw against Coleraine lifted them into fourth place, meaning they will have home advantage against Dungannon in the semi-finals of the Europa League play-offs.
Cliftonville will host Glenavon in the other semi-final, with the matches being played on Monday, 8 May.
Carrick are seeking a new manager as they prepare for the promotion/relegation play-off games after Aaron Callaghan quit minutes after their 4-1 defeat away to Ballinamallard United.

Joshua's promoter Eddie Hearn has confirmed that American Martin, also undefeated, is a possible opponent for Joshua at London's O2 Arena on 9 April.
Martin, 29, has won 23 and drawn one of 24 fights and beat Vyacheslav Glazkov for the vacant IBF belt in January.
An Olympic gold medallist at London 2012, 26-year-old Joshua has 15 knockouts from 15 professional fights.
He most recently beat Dillian Whyte with a seventh-round knockout to claim the British heavyweight title, the first time he has been taken past the third round.
Tyson Fury was stripped of the IBF world heavyweight title after he opted for a rematch against Ukrainian Glazkov's compatriot Wladimir Klitschko rather than face the mandatory challenger.

Ben, from Sheffield, South Yorkshire, was 21 months old when he disappeared on the Greek island on 24 July 1991.
Speaking on ITV's Good Morning Britain, Kerry Needham said she had been warned to "prepare for the worst".
Police searches have entered a third week after it emerged he may have been accidentally killed by a digger driver.
Mrs Needham said: "I think it really now is a case of finding him not alive.
"We can't live another 25 years like this, my parents can't and I can't.
"It's not the best solution but it will eventually lay it to rest for us, we're all extremely tired and distressed."
She added: "Twenty-five years living and not knowing where your child is is torment.
"I don't like to say it, but then at least we would know and it would be closure and he can be laid to rest and we can remember him as he was."
Mrs Needham said it was an "agonising wait every day" for news from the police.
She said: "Unfortunately it looks like it's going to be a bad outcome but we'll just try to get on with everything."
About 60 items found in the search are being sent back to the UK for analysis, with police extending their stay to search a second site 750m away from where he was last seen.
Andrew Waterworth scored a second-half hat-trick as Linfield beat Cliftonville to clinch the title on a dramatic final day of the Irish Premiership season.
[NEXT_CONCEPT]
Unbeaten British heavyweight Anthony Joshua is in talks over an IBF world title fight against Charles Martin.
[NEXT_CONCEPT]
The mother of missing toddler Ben Needham has said she now believes her son is likely to be found dead after disappearing on Kos 25 years ago.