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Five Lee Brennan points helped Tyrone lead 0-7 to 0-6 after a tight first half at the Athletic Grounds.
However, Monaghan hit five out of six scores after the resumption to move into a 0-11 to 0-8 lead.
Tyrone cut the margin to a point but Adam Treanor's late score helped Monaghan complete a deserved success.
Barry McGinn top-scored for Monaghan with six points while his team-mate Ryan McAnespie completed a hat-trick of Ulster football medals after his earlier senior and minor successes.
The victory clinched only Monaghan's third Ulster under-21 title.
Monaghan, managed by former Tyrone star Ciaran McBride, will probably look back on a crucial early double save by keeper Conor Forde which prevented Sean Fox from netting.
After Shea Hamill opened the scoring for the Red Hands the sides were point for point until two in a row from McGinn and another Monaghan senior panelists Conor McCarthy helped the Red Hands lead 0-4 to 0-3.
Three straight Brennan scores edged Tyrone two ahead but an Aaron Lynch point helped Monaghan level before Brennan's fifth score of the half left the Red Hands 0-7 to 0-6 ahead at the break.
However, Monaghan's dominance of the third quarter turned the match in their favour as two points apiece from McGinn and McCarthy plus a Barry Kerr score helped them move 0-11 to 0-8 ahead.
Tyrone remained three in arrears with five minutes left before scores from Cathal McShane and David Mulgrew left the minimum between the sides with two minutes of normal time remaining.
However, Tyrone were unable to get on terms and Treanor's point in the fourth minute of injury completed Monaghan's deserved win.
Monaghan clinched their first Ulster Under-21 Football title since 1999 as they beat All-Ireland champions Tyrone 0-13 to 0-11 in the provincial decider.