aAlcaraz has been a strong favourite to finish as the year-end No 1 since his comprehensive victory against Sinner in the US Open final last September, but the race got close after Sinner won the China Open, the Vienna Open and the ATP 1000 title in Paris.
That meant Alcaraz needed to win all three of his group stage matches at the ATP Finals to clinch the No 1 ranking and that looked like a tall order given his recent struggles on indoor courts.
Yet the brilliant Spaniard found his best form when he needed it and Sinner's compatriot Musetti was no match for Alcaraz, who recorded a thumping 6-4, 6-1 victory.
"The match was really important for me, playing for year-end No 1," said Alcaraz
"It means the world to me, to be honest. The year-end No 1 is always a goal. At the beginning of the year, I saw the No 1 really, really far away (with) Jannik winning almost every tournament he plays.
"But from the middle of the season 'til now, I gave myself the goal for the No 1 because I thought it was there. I had the chance to play great tennis in a lot of tournaments in a row to put myself in with a chance to be close to Jannik for the No 1.
"Then in the last three, four tournaments of the year, (I was) fighting toe to toe with Jannik for this spot and then finally I got it. For me, it means everything.
Commenting on the win against Musetti, Alcaraz added: "It wasn't easy at the beginning with the nerves. I tried to handle that pressure the best I could, so I am just really happy with the level I played and to be able to end the year as the No 1.
"This tournament is really important for me. I am excited about qualifying for the semi-finals and hopefully getting to the final. We will see - part of the job is done, but I'm excited to keep going."
Alcaraz would have felt the pressure heading into this match, as he knew a defeat could put a real dent in his hopes of sealing the No 1 ranking.
With Sinner in dominant form and being cheered on by his passionate Italian fans in Turin, he has to be the strong favourite to lift the title for a second successive year on Sunday.
Yet he won't finish 2025 as the world No 1 and while his supporters will claim he would have won that prize comfortably if he were not banned for three months due to a doping offence, Alcaraz is a worthy winner of the prize.
Alcaraz's second year-end No 1 ranking coronation also ensured he became just the second player to secure multiple year-end ATP year-end No 1 rankings before turning 23, after Lleyton Hewitt (2001-02).
It means he has achieved a feat Roger Federer, Rafael Nadal and Novak Djokovic could not achieve before they toasted their 23rd birthday.