Four years after winning his first major in Dortmund, Smith claimed the £150,000 prize and added the European Championship to his World Series of Darts Finals title from September.
After the first four legs went to a throw, Smith won six in a row to build an 8-2 lead. Schindler responded with a comeback that included checkouts of 116 and 127, but Smith held his nerve to clinch the title with his fifth match dart.
“To have this trophy in my hands and to win another major, I’m absolutely over the moon,” said Smith.
“I was a little bit nervous going into that last break. Martin wouldn’t let up, would he? Full credit to him.
“I just play the game in front of me. Every game I play is a final, I’m buzzing to have won another major (...) that’s for my mum and dad!”
Top seed Smith began his campaign with a 6-4 win over Karel Sedlacek on Thursday before beating Damon Heta 10-7 in the second round.
He averaged 107 in a 10-6 victory over Luke Woodhouse in the quarter-finals on Sunday, before recovering from 4-1 down to beat Gerwyn Price 11-7 and book his spot in the final.
Smith became the first top seed to win the European Championship since 2017, moving up to world number six and taking his tally of major titles to three.
“It’s a strange one. I really don’t think I played great this week,” Smith said.
“I had a really good game against Luke Woodhouse. I think a lot of players let me off as well, but sometimes you have to win ugly.
“I’ll keep doing what I’m doing. I’m loving the darts and I’m enjoying playing in front of amazing crowds like this. They were so respectful. They’ve been absolutely brilliant today.”
Schindler, who entered the tournament as the 31st seed after qualifying at the year's final European Tour event, started with a deciding-leg win over Wessel Nijman on Friday.
The German number one then beat Jermaine Wattimena 10-4 before thrashing Jonny Clayton 10-1 in the quarter-finals, averaging more than 103 in the latter.
He followed up those performances by beating Krzysztof Ratajski 11-6 in the semi-finals, securing himself a place at the Grand Slam of Darts and rising to world number 20 in the process.
“When I started playing darts ten years ago, I didn’t expect anything and now I made a major final,” Schindler said.
“I tried everything to win this one, but fair play to Ross, he played well.
“The crowd were always supporting me and I really appreciate it. Thank you, Dortmund!”
Ratajski also impressed by knocking out world number one Luke Littler to reach his first major semi-final since 2021. The Pole held off a fight-back from the world champion to win 10-6.
In the other quarter-final, Price beat Stephen Bunting 10-3, averaging more than 103.
Results
Quarter-finals
Ross Smith 10-6 Luke Woodhouse
Gerwyn Price 10-3 Stephen Bunting
Martin Schindler 10-1 Jonny Clayton
Krzysztof Ratajski 10-6 Luke Littler
Semi-finals
Martin Schindler 11-6 Krzysztof Ratajski
Final
Ross Smith 11-8 Martin Schindler