The Northern Irishman has slipped out of the world's top 32 in recent years, having previously reached the 2011 World Grand Prix final before winning five ranking events in 2013 and 2014.
A run to the World Championship quarter-finals in December had been a much-needed boost for Dolan, and he came through the 128-player field in Hildesheim to take the £10,000 Players Championship top prize.
Dolan opened his day with a 100 average in edging past Jeffrey de Zwaan 6-5, and after seeing off Alan Norris and Chris Dobey, Dolan then averaged almost 107 to defeat Dave Chisnall 6-5.
He repeated that scoreline in a quarter-final win over Glen Durrant, and averaged over 100 again in a 7-3 semi-final win over Cody Harris.
The opening stages of the final proved tight as Dolan and Wattimena shared the opening four legs, before a 13-darter saw the Northern Irishman break in leg five.
Wattimena finished 86 to break back and level, but a superb 11-darter from Dolan sparked a run of four straight legs as he moved one away from victory at 7-3.
Wattimena landed 180s in the next two as legs of 13 and 14 darts saw the Dutchman battle back, but Dolan finished 108 to at last secure the title.
A tearful Dolan admitted: "I just can't believe it. It's brilliant, absolutely brilliant.
"I've worked so hard and I haven't got results out of it. Yesterday, the way I played was unbelievably bad and I sent my wife a text. She told me to wise up.
"I used to always say that if I get past the first round then I'm dangerous. I've tried really hard this last 18 months and not got the results, but I've performed really well.
"I think I've got the luck on the day today and it's just great to get a win."
Dolan's last title came in Dublin in October 2014, and he added: "To be honest, I can't remember five years ago! I really couldn't remember how to win and today it was about saving face.
"This game's all about pressure, mental pressure. I pressurise myself all the time, and my wife told took all the pressure off me and told me just to play darts."
Players Championship 22 results
Last 16
- Ian White 6-5 Harry Ward
- Mensur Suljovic 6-3 Michael Smith
- Steve Beaton 6-1 Joe Cullen
- Jermaine Wattimena 6-5 Gabriel Clemens
- Brendan Dolan 6-5 Dave Chisnall
- Glen Durrant 6-2 Ricky Evans
- Cody Harris 6-1 Marko Kantele
- Krzysztof Ratajski 6-5 Arron Monk
Quarter-finals
- Mensur Suljovic 6-5 Ian White
- Jermaine Wattimena 6-2 Steve Beaton
- Brendan Dolan 6-5 Glen Durrant
- Cody Harris 6-4 Krzysztof Ratajski
Semi-finals
- Jermaine Wattimena 7-6 Mensur Suljovic
- Brendan Dolan 7-3 Cody Harris
Final
- Brendan Dolan 8-5 Jermaine Wattimena
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