Fanning shaded 2001 world champion Hobgood 12.00 to 10.50 in the fifth round after scoring a 9.50 with his final wave.
In the quarter-final, Australia's world ranked No.32 Nicol was on the verge of ousting Fanning, who needed a 9.57 to advance to the last four.
With the clock again showing under two minutes, Fanning delivered once more, scoring a spectacular 9.70.
The Gold Coast surfer waited nervously on shore before the judges scores came through and he was chaired up the beach by the crowd with his arms raised.
"I just saw the set on the horizon, and I thought `alright, whatever's going to come, I'm just going to try and pick the right one,''' Fanning said.
"That wave came and it was so beautiful.
"I'm just overwhelmed with emotion right now, its incredible.''
Not surprisingly, Fanning had little left in the tank for his semi-final against Hawaiian John John Florence
Fanning was outscored 18.30 to 5.00, with Florence clinching his second Triple Crown title in three years.
Slater produced some sensational scoring on the final day on the way to winning a seventh Pipe Masters.
He scored 18.8 in his quarter-final and 19.63 in his semi-final win over Australia's 2012 world champion Joel Parkinson.
Slater then shaded Florence 16.37-15.90 in the final.
- AAP