Lyndsey Corry was the heroine for the Blues as she tucked away the winning spot kick to give Ryan McConville's side the trophy against a Newry side that had scored two late goals to take the game to extra-time.
Linfield opened the scoring five minutes before half-time when captain Sarah Venney was on hand to blast home Kirsty McGuinness's cross.
They doubled their advantage on 62 minutes when Ashley Hutton was the quickest to react after Newry keeper Linda Meehan couldn't hold a stinging McGuinness free-kick.
However, Newry kept plugging away and pulled one back three minutes from time when substitute Ali McMaster prodded the ball home and then the equaliser came in controversial circumstances in the last minute.
With keeper Nicole Adams lying injured on the penalty spot, play continued and Grace Murray fired the ball into the empty net from all of 40 yards. With no real chances in extra-time, Aimee Mackin saw the first spot kick for Newry saved before Lauren Robson had the chance to win it for Linfield only to see Meehan stop her effort.
However, when Julie Henderson missed in sudden death, Corry made no mistake.
Linfield Ladies: Adams, Myles, Haddock, Hutton, Robson, Venney, Corry, Ennis, Gray, McGuinness, Graham (Dempster 100). Subs not used: C Orr, M Orr, McCarthy, McAllister.
Newry City Ladies: Meehan, E McMaster, Domican (Clements 110), Redpath (McLaughlin 84), Mulvenna, Feehan, Murray, Lennon, Henderson, Jackson (A McMaster 73), A Mackin. Subs not used: Troughton, McCann.
Referee: Victoria Finlay.