The Liverpool forward had earlier seen a seventh-minute penalty saved by Pharaohs keeper Gabaski.
Chelsea’s Edouard Mendy denied Mohanad Lasheen to give Mane the chance to win it in Yaounde’s Olembe Stadium.
Gabaski had made three good saves from Senegal’s Bamba Dieng in extra time.
And in a match billed as a battle between Liverpool forwards Mane, of Senegal, and Egypt captain Mohamed Salah, it was the former who had the decisive word.
After two previous final defeats, Senegal are Africa Cup of Nations winners at last, while Egypt missed out on a record-extending eighth continental crown that would also have been a first for Salah.
“It just shows that if you work hard, if you persevere, you will get what you want,” Senegal coach Aliou Cisse said.
“I am very emotional because the people of Senegal have wanted this trophy for 60 years.”
All four of Egypt’s knockout games at the tournament went the distance, and the North Africans had beaten Ivory Coast and hosts Cameroon on spot-kicks en route to the final.
Gabaski had already saved four penalties at the tournament by the time the match went to a shootout, but on this occasion the 33-year-old ended on the losing side.
Egypt were the first to err when centre-back Mohamed Abdelmonem saw his penalty hit the left-hand upright and bounce away – but Gabaski immediately denied Bouna Sarr.
However, Lasheen saw his effort saved and Mane won it with an emphatic finish into the bottom left-hand corner.
His Liverpool team-mate Salah did not even have the chance to take a penalty, with the Pharaohs captain set to go fifth for his side.
Senegal’s two Nations Cup final defeats came in 2002 and 2019.
And while the Teranga Lions will celebrate finally winning the tournament, Egypt will soon have a chance for revenge, with the two sides meeting again next month in a two-legged play-off for a spot at the 2022 World Cup in Qatar.
Mane spurns early penalty
The match saw a free-flowing Senegal side with Mane as its attacking spearhead come up against Salah’s compact and defensively-minded Egyptian outfit.
The West Africans were handed an early chance to take a lead when Abdelmonem lunged in on Senegal left-back Saliou Ciss in the fourth minute.
Mane had words with Gabaski before placing the ball on the spot – appearing to tell the keeper to get back on his line.
The 29-year-old blasted his attempt just to the left of centre, but Gabaski dived the right way and punched the ball clear.
Salah was well-marshalled by the Senegal defence and only had two efforts in the first half, forcing Mendy into a good save with the second.
The second half became somewhat fractured as record seven-time champions Egypt, with coach Carlos Quieroz absent from the touchline through suspension, looking to break up play.
Extra time was more lively as Senegal took the game to their opponents, and Dieng saw a low, angled effort pushed away, and a good downward header clawed behind.
The substitute then had a long-range shot pushed behind before Mendy tipped over a fierce attempt from Marwan Hamdy with three minutes remaining.
Redemption for Cisse
Senegal have been Africa’s top-ranked side for the past three years under coach Cisse, who as a player missed a crucial penalty in the 2002 final defeat and was in the dugout for their loss three years ago.
Mane was instrumental in their landmark success in Cameroon, scoring three goals at the tournament and setting up another two.
Salah’s influence waned as the contest went on and he ended on the losing side for the second time in a Nations Cup final, having been part of the Egypt side beaten by Cameroon in 2017.
The next Afcon is due to take place in the Ivory Coast in June and July next year.
The Teranga Lions eventually ended their wait to lift the trophy after a protracted presentation which saw captain Kalidou Koulibaly go up to the VIP box in the stands alongside Confederation of African Football president Patrice Motsepe and Fifa president Gianni Infantino to greet Cameroon president Paul Biya.
‘Mane carried Senegal on his shoulder’
Jermaine Jenas told BBC Three: “Sadio Mane has put his country on his shoulders and given the title to them. This is Senegal’s golden generation and they have managed to do it, it is a big moment for the country.
“Mane hit that penalty without any doubt he would score, which is incredible with the pressure he was under.
“You can see Mane is a leader. We know he is a top, top footballer, but the growth in the player over the years was very visible today in the biggest moment of his life.”
