Britain's James Toseland, who started the race in 10th position, finished in 11th place.
"Today was a great battle, it was a great race," said the 29-year-old Rossi, who started fourth on the grid. "I felt confident with the bike and winning the race and world championship is fantastic."
A world champion at both 125cc and 250cc, Rossi claimed the 500cc crown in 2001 and won the MotoGP title every year from 2002 to 2005 but lost out to American Nicky Hayden in 2006 and Stoner in 2007.
Best World title so far - Rossi
"It is difficult to say which world championship is better, but this is great," said Rossi.
"I feel very good. The battle this year was very tough especially with Stoner and Pedrosa."
Rossi secured his latest championship with three races still left of the 2008 campaign which underlined his dominance this season.
"It was a long season with a lot of hard racing and hard battles," he added. "I have won a lot of difficult championships, like the first one with Yamaha in 2004, but I think this one is the one that I put more effort into to win.
Valentino is a worthy champion - Stoner
"I worked a lot in the week of the races, but also out of the races I also try to stay concentrated and very strong.
"My team deserves the championship. We work hard every weekend and we are very fast."
Stoner told BBC Sport that Rossi deserved his title.
"I felt really good out there but about halfway round I started to tire," said the Australian. "I couldn't control the bike and I let Valentino pass.
"I felt better towards the end of the race but made a little mistake and couldn't make up the time. Valentino is a worthy champion."
Rossi's victory in Japan handed him a unassailable 92-point lead with three races left in Australia, Malaysia and Valencia.
The 29-year-old made a decent start to the race and soon found himself in third position, he soon past Honda's Pedrosa on lap six before reining in Stoner eight laps later to claim the world title.
Japanese MotoGP result:
1. Valentino Rossi (ITA) Yamaha 43min 09.599secs, 2. Casey Stoner (AUS) Ducati at 1.943, 3. Dani Pedrosa (ESP) Honda 4.866, 4. Jorge Lorenzo (ESP) Yamaha 6.165, 5. Nicky Hayden (USA) Honda 24.593, 6. Loris Capirossi (ITA) Suzuki 25.685, 7. Colin Edwards (USA) Yamaha 25.918, 8. Shinya Nakano (JPN) Honda 26.003, 9. Andrea Dovizioso (ITA) Honda 26.219, 10. John Hopkins (USA) Kawasaki 37.131, 11. James Toseland (GBR) Yamaha 37.574, 12. Randy De Puniet (FRA) Honda 38.020, 13. Marco Melandri (ITA) Ducati 39.768, 14. Sylvain Guintoli (FRA) Ducati 45.846, 15. Anthony West (AUS) Kawasaki 55.748, 16. Toni Elias (ESP) Ducati 59.320, 17. Alex De Angelis (RSM) Honda 1:12.398.
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