'Charisma seen from space' - Britain's Davis stuns Rabadanov
London's Davis landed the more damaging strikes to edge a close contest with all three judges scoring it 48-47 in the 33-year-old's favour.
Davis was overcome with emotion as the result was read out as he won $500,000 (£369,000) - a prize he described as "life-changing".
He becomes the third Briton to win an annual PFL tournament after featherweight Brendan Loughnane in 2022 and women's flyweight Dakota Ditcheva last year.
"I don't know what to say, I've worked so hard for this," said Davis.
"To be a champion like Gadzhi, I respect him and have watched him for so many years – he and his team are amazing. To beat someone like that is a dream come true."
Davis reached the final after enjoying the best spell of his 11-year career with wins over Clay Collard and Brent Primus.
In Russia's 32-year-old Rabadanov, however, he was facing last year's champion and a fighter on a 12-fight win streak.
Davis said he had suffered from a lack of confidence in the past, but has put that behind him with a string of impressive displays.
His new-found confidence was on full display as he danced his way to the cage, before being introduced as someone whose "charisma can be seen from space".
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Following a tentative first round, Rabadanov took control, earning the first takedown of the fight and controlling the action on the ground.
Davis, who had been on the back foot, started to open up in the third by stifling Rabadanov's pressure with a number of counter strikes.
As the crowd rallied, chanting "Alfie, Alfie", Davis landed an eye-catching spinning elbow, before spending the fourth round on his back following another takedown by Rabadanov.
Sensing the fifth could decide the fight, Davis' team said "win this round, change your life" before the final five minutes, and he delivered by landing the more damaging strikes.
Confident of victory, Davis ran around the cage with his arms aloft after the final bell before calling for the winner of Russia's Usman Nurmagomedov and Irishman Paul Hughes.
Nurmagomedov defends his PFL lightweight belt, which was formerly the Bellator title, in a rematch against Hughes in Dubai on 3 October.
In the women's flyweight final, Liz Carmouche knocked out fellow American Jena Bishop before calling for a fight with Ditcheva.
Ditcheva, who has won the first 15 fights of her career, beat Sumiko Inaba in July but is currently recovering from surgery after injuring her hand during the bout.
Britain's Fabian Edwards competes in the middleweight final later this month when he faces American Dalton Rosta on 21 August in Hollywood, Florida.
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