Sharapova lost to Li in the semifinals of last year's tournament in Birmingham and the Chinese player produced a repeat performance 12 months on, winning her maiden title on grass.
"Last year I beat Maria in the semifinals and then was so excited I forgot I had another match," Li said.
"I'm excited again. If I had another match this time, I think I would probably lose that too."
Second-seeded Sharapova won here in 2004 _ the year she won Wimbledon _ and again in 2005.
Sharapova broke Li early and led 3-1 but then found it increasingly hard to land her first serves.
Once Li broke back for 3-3, she got on top and by the start of the second set, Sharapova's confidence had dipped.
The Russian player, who had seven double faults in total, was outmaneouvred in the baseline rallies as Li hit a number of brilliantly struck drives from both wings to close out the victory.