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A first half goal from Rowan McDonald ensured City entered the break in the lead at Cobham Training Ground, but a second half strike from Chelsea meant the sides ended level after 90 minutes which prompted extra time.
City came out on top in the end, when defender Taylor Bellis hit home to ensure the trophy would be coming back to Manchester.
Tommy Doyle had a hand in both goals, providing assists to McDonald and Bellis.
Under-16 coach and former City winger Mark Kennedy has expressed his delight for the players, but has stated that the development of the players is still key.
"If you’re winning you must be doing something right," Kennedy told ManCity.com. "The first thing is that the club is ultimately about development but it’s nice to get recognition for me and the players.
"The team have played in five national tournaments, and Saturday’s game was their fifth final. I was really pleased for them because they’re so honest and respectful to eachother and they’re a pleasure to work with.
"It was like the icing on the cake for them."
The City coach explained that the team's mentality played a big part in Saturday's win.
"Psychologically we were playing Chelsea, the final was at their training ground, and we had also played the semi-final on Tuesday so didn’t have long to recover - also the game went into extra time.
"There were so many things which tested the players but they ticked each box. To go on and get the goal when it came shows they never give up and never give in.
"They got tested in so many ways but especially psychologically.
"I’m just so pleased for the players for the experience they gained with that tournament. We lost the International Premier League tournament this year in may and part of our team talk was ‘how horrible did that feel?’ – but losing that tournament was brilliant because the players have to have disappointments and failures, because then they know how to deal with it."Journey to the final
The Blues sealed a 3-1 win over West Brom U16s in the quarter-finals and progressed on to play Arsenal in the semis at the CFA.
We booked our place in the final courtesy of an impressive 5-1 home victory over the Gunners.
Our PL Cup final opponents, Chelsea, booked their place against us following wins over Norwich City and Liverpool.
A great achievement for our Academy and on behalf of everyone at Manchester City we would like to congratulate our Under-16s on their trophy!
Games against West Ham and Liverpool cancelled due to weather conditions.
Sunderland U18s v City...
Gareth Taylor says that experiencing the lows of losing are just as important as the highs of winning in making professionals out of his Manchester City under-18 side.