The fifth-seeded Italian won on the sun-drenched clay court after taking a 4-1 lead in the final set.
Fognini lost his first two career finals last year and went into the match with a 0-2 record against Kohlschreiber. Although he could not capitalize on an early break in the first set, Fognini took a 3-1 lead in the second. Kohlschreiber saved four set points in the eighth game before Fognini served out the set.
Fognini led 4-1 before dropping serve in the third. He held on and became the first Italian champion in Stuttgart.