Haye, who became Britain's first heavyweight champion since Lennox Lewis retired six years ago, scored 116-112 points on the scorecards of two judges, the third giving it a 114-114 tie in the bout dubbed "David versus Goliath."
"This means everything to me. Since I was a little baby, I wanted to be heavyweight champion of the world," Haye said in a ringside interview. "It's amazing. I dreamt of this, now it's reality, it's real... he wasn't hitting me so as long as you are not getting hit you are okay.
"I hit his head early in the fight but it was the hardest thing I've ever hit, it was like hitting a brick wall... I'm pretty sure I've broken my hand. I made him look like an amateur. People doubted my skills... but I did enough to win," Haye said.
Valuev, the tallest and heaviest world champion of all time who has yet to be floored in his 16-year professional career having lost only one bout, struggled throughout the 12-round bout against a speedier opponent who is also lighter by 44 kilos.
Former world cruiserweight champion Haye, who took a 22-1 record into the bout with the 'Beast from the East', is also almost a foot shorter than his seven foot (2.13 metres) opponent but he made up for it in speed and accuracy.
DAMAGED RIGHT
"I damaged my hand early on in the second or third round so I couldn't throw too many right hands, so I had to win it with my left hand. I had to take my foot off the gas and win it clever," said Haye.
"I'm having it large tonight. I've disciplined myself so much over the last six months. I was gutted when the fight earlier in the year fell through (against IBF, IBO and WBO champion Vladimir Klitschko), but this makes up for everything."
The 29-year-old Londoner landed a handful of big left-right combinations in the early rounds that troubled the towering Russian who could not pin the quick Haye to the ropes.
Valuev failed to connect, landing almost no damaging blows, as he struggled to cope with Haye's pace.
"The speed of my opponent was a problem," said Valuev. "I could not work my right, and the 40-plus kilos difference in weight is something you start to feel."
Haye even landed a massive left hook 60 seconds before the end of the final round, rattling the 36-year-old and threatening him with his first knockout.
The Russian managed to stay on his feet but knew too well the title was lost.
"It was all decided in that final round," Valuev said, whose record now is 50-2. "It was clearly that last round."
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