The hostilities started in Munich five months ago were ended by a stunning left hook that spelt the end of Chisora's challenge at Upton Park.
Haye, who was being outmuscled by his heavier opponent, was in trouble before he delivered the decisive blow that sent his 28-year-old opponent to the canvas.
Chisora beat the count but referee Luis Pabon waved the fight off once he was dropped for a second time, a left hook doing the damage once again.
The preceding action had been brutal in a fascinating contrast of styles, Chisora bullying at close range while Haye wanted to keep the fight at distance.
Chisora was first into the ring and was kept waiting for several minutes by Haye, who clearly won the popularity contest with the crowd.
The rain that began falling 15 minutes before the main event failed to dampen the spirits of the 30,000 who had bought tickets and generated a charged atmosphere.
Haye, who was conceding two and a half stones, started with ferocious intent as he fired a succession of vicious shots.
But he was caught twice by Chisora, first by a left hook and then a jab in an exciting first round.
Chisora was clearly unfazed by his opponent's aggression as he stalked him across the ring, although Haye caught him with a straight right.
Both fighters continued to throw punches after the bell for the second round had sounded, though Pabon was quick to separate them.
Pabon had to intervene once more after the third once Chisora landed with a hard left hook as the rivals had failed to hear the bell.
Chisora was dominating the close exchanges but Haye was more dangerous from range with both landing powerful shots.
At one point in the fourth Chisora - who was being cheered on by Tim Witherspoon at ringside - looked hurt but Haye failed to pile on the pressure when he was on the corner.
In the fifth Chisora's greater bulk appeared to be making the difference as he piled on the pressure, only for Haye to intervene with the one-punch power that made him such a threat.
The fight took place despite opposition from the British Boxing Board of Control, whose refusal to sanction the showdown was easily circumvented by having the anonymous Luxembourg Boxing Federation license both fighters.
Strong moral objections also existed given that Haye and Chisora were effectively profiting from their disgraceful brawl in Munich five months ago.
For all the condemnation, however, interest in the showdown was substantial with the 30,000 tickets sold surpassing the attendance for Lennox Lewis v Frank Bruno in 1993.
Only a year ago the prospect of Haye clashing with Chisora was unthinkable as the former WBA world heavyweight champion prepared for a career-defining showdown with Wladimir Klitschko.
But his popularity plummeted after a lamentable display with public opinion further turning against him when he blamed the wide points defeat on a broken little toe.
Frustrated in his pursuit of Wladimir's brother Vitali, he instead settled for a pay-day against Chisora once their fireworks in Munich had ignited interest in the fight.
It clearly irritated Haye that he had to share a ring with someone he considers vastly inferior, but Chisora's performance proved him wrong.
Five months ago in Munich the rivals brawled at a press conference in scenes that disgraced British boxing, but they hugged after sharing a thrilling fight.
"Any damage that was done by our altercation in Munich is well and truly fixed now," Haye said.
"People said that was a black eye for boxing, well the bags have gone from boxing's eyes now.
"The crowd have gone home happy with a smile on their face. That's the bottom line.
"Whatever beef I had with Dereck before the fight is over now from my side and I hope it's vice versa.
"After sharing a ring with Dereck I have a new found respect for the man.
"I had respect for his boxing ability but I never believed he could be as good as he was tonight [Saturday]. He raised his game.
"He said to me before the fight 'you'd better bring it' and I was 'yeah right'. I'm glad I did because otherwise it would have gone pair-shaped.
"If I turned up in the same condition as I was for John Ruiz, there's a good chance I'd have lost the fight.
"When you get guys who are similar in size, are willing to put it on the line and throw massive shots, it only helps boxing
"I'm glad the event went as smoothly as it did. All of the negative press before the fight, everyone can eat their words now."
The 28-year-old, whose pressure style gave Haye problems, agreed their dispute was over and pledged to honour their bet that the loser would donate £20,000 from their purse to the charity of the winner's choice, in this case the Afro-Caribbean Leukaemia Trust.
"The beef is over for me as well....now we can eat in the same restaurants and go in the same clubs. After the fight we made up," Chisora said.
"It was a great fight and everything is done. Now I'm £20,000 down, but a bet is a bet.
"I enjoyed the fight, it was a great fight and both of us came to fight. I drew the short straw."
Frank Warren, Chisora's manager, agreed the reputation of boxing had been restored by events at Upton Park.
"Boxing has redeemed itself and there was respect shown by both boxers after the fight," he said.
"These guys are fighters and it was important to let them do what boxers do - sort their problems out in the ring.
"The atmosphere was fantastic, the crowd went home happy and this was a great night for British boxing."