The two finalists returned to the stage to perform live for the Judges and a huge audience with hopes of winning the public vote.
Nicholas first performed his favourite song of the series which was Sarah McLachlin's Angel, prompting Gary Barlow to describe it as "stylistically perfect".
Nicole Scherzinger told the young singer: "You have the voice of an angel with butter wings."
Sam then performed her favourite song, Jennifer Rush's huge ballad The Power of Love.
"You make this look so easy," said Nicole. "Sam, you were born to do this."
Mentor Sharon Osbourne added: "You were my winner from your very first audition."
The X Factor final saw the return of all ten finalists as they performed a rendition of Katy Perry's Roar.
The singer herself also made an appearance as she sang her new single Unconditional, and as always the crowd went crazy when X Factor graduates One Direction took to the stage.
You have stolen the hearts of the nation.
Gary Barlow to Sam Bailey
Armed with guitars, the five-piece sent Wembley Arena into a frenzy as they performed for the audience.
Gary also made an appearance on stage as he sang his latest single with his own "music hero" Elton John.
Speaking to host Dermot O'Leary, Elton pledged his support for both Sam and Nicholas who he described as both "talented and humble".
But before the all-important result was revealed, the final two performed their winner's singles.
The X Factor champion will now release her version of Demi Lovato's Skyscraper, which reduced Sharon to floods of tears rendering her unable to speak.
Record label Syco will donate 100% of its profits from the sales of each CD single and download to be shared equally by the charities Great Ormond Street Hospital Children's Charity and Together for Short Lives.
This donation will be at least £1 for each CD sold in the UK and at least 20p for each download sold in the UK.
Sam and Nicholas had a tense wait before the mum-of-two was announced as the winner, leaving her in shock.
Asked how she felt, Sam immediately turned the attention back to Nicholas, telling Dermot: "I love that boy to pieces. He deserves to record an album and I know he will be a huge star."
Dermot then presented Sam with a copy of her winner's single, to which she joked: "I look so thin!"
This has been the most amazing ten weeks of my life.
Speaking after the show, Sam revealed she has some big plans now the craziness of the X Factor is finished.
"After the next few incredible days are over, I will be going home and booking a holiday to France," she explained.
"I promised my daughter I would. She was really worried about me entering this competition - how she wouldn't see me much and it has been hard being away from the kids.
"She's really interested in the Eiffel Tower, Le Louvre and France generally so we'll go over there together and my son can enjoy Disneyland Paris too. They've been so good and patient over the whole process, I want to treat them."
After the show, it was also revealed which of the final 10 acts the X Factor judges had predicted would be the winner.
And it seems the eventual result was no surprise to anyone as all four Judges guessed that Sam would come out on top - a first in the history of The X Factor.
It was also revealed that Sam had received the highest number of votes on eight out of the ten live shows, with Nicholas winning the other two.
The X Factor will return to UTV next year.