The Desert Foxes laid claim to the title in a gripping match after a 29-year dry spell.
Algeria took the Africa Cup of Nations for the second time in its history, thanks to Baghdad Bounedjah's deflected goal early on in the game.
Baghdad Bounedjah’s strike caught a deflection from defender Salif Sane, climbing high before landing in the back of the net with goalkeeper Alfred Gomis unable to intercept.
After a break, Senegal thought nearly had the advantage when Adlene Guedioura was brought up on handling the ball in his own area, but after a VAR intervention the referee reversed his decision.
M'Baye Niang came close to scoring, but failed to hit the target from inside a narrow angle after rounding Rais M'bolhi within the penalty box.
The match has been described by many as a face-off between Manchester City's Riyad Mahrez and Liverpool's Sadio Mane.
After falling behind, Senegal managed to dominate the remainder of the match, but remained unable to equalise.
Senegal made a total of 12 shots, with 3 on the net, and held a 63% possession rate; relative to Algeria's 1 shot on net which landed it the win.
It's been a long road to the final, with Algeria defeating Nigeria, 2-1, to make it to the final, while Senegal beat Tunisia, 1-0, in a close overtime action last Sunday.
Algeria played with creative attacking football during its lead up matches, but couldn't maintain their style in the intense final match.
Senegal kept the pressure on Algeria, but was unable to creatively shape opportunities for strikes in the last third of the match.
Liverpool's Senegalese Sadio Mane tried to revive his team's momentum, but couldn't capture the ball enough to make a difference. Meanwhile, Man City Mahrez gave more defensively, a sharp contrast to the offensive game he's known for.
Djamel Belmadi, Algeria's new coach is the sixth manager in just over two years. The final in Cairo between Senegal and Algeria saw two "local" coaches face off against each other, a rarity last seen in 1998.
Belmadi has shown a new, daring style, by dropping well-known players and giving young Algerian players a chance such as Belaili and Djamel Benlamri, instead of traditionally relying on French-born Algerians to fill the team.
His philosophy harks back to the golden age of Algerian football. Everyone, including offensive strikers, should give it their all and play defence too.