The Croatian took the first set 6-2, but Hsieh, who has made it a habit to chase down lost causes, fought back in the second, coming from a 2-3 deficit to win 7-5.
Twice in the third set Martic called for the trainer and after being broken for the third time in the match, which gave Hsieh a 3-1 lead, she looked a beaten woman.
After Hsieh held serve to go 4-1 up, Martic called the trainer for a third time and decided she could not continue, handing Hsieh the first WTA title of her career.
Women?s Tennis Association tour supervisor Pam Whytcross said Martic had to pull out as she was suffering from heat exhaustion.
"She is not injured and just needs a bit of rest. She had a big day today, playing nearly five hours of tennis and is completely exhausted," she said.
Earlier Sunday, Martic endured an epic semifinal battle against former world number one Jelena Jankovic, taking three hours and six minutes to grind out a 6-7 (5/7), 7-5, 7-6 (7/5) victory.
She was taken the distance in all her matches in Kuala Lumpur, taking three sets to beat Erika Sema, Kurumi Nara, Peng Shuai and Jankovic, and the physical exertion finally caught up with her.
Hsieh admitted luck played a part in her tournament victory. Top seed Agnieszka Radwanska also pulled out of their match on Friday after suffering an elbow injury.
"Malaysia seems to be a lucky charm for me as I won here as a 14-year-old and also seem to have good results when I play in the Federation Cup," said the 26-year-old.
"I got a bit lucky in the end as Radwanska retired injured and Martic didn?t finish. But, I too had a tough time coming to Malaysia, not getting enough rest from Dubai and playing in the qualifiers.
"I may pull out of next week?s Indian Wells singles event and concentrate on the doubles. I will be playing in the Olympics later this year and I don?t want to get injured as the Olympics is very important to me and my country."
Jankovic, the number two seed, reached the semifinals Saturday without having to pick up her racquet after Japan's Ayumi Morita pulled out injured.
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