The Liverpool fighter looked at his very best as he evaded a Haye attack in round three before landing a superb left hook and right hand to floor his rival.
A second knockdown followed moments later and Bellew – the underdog with bookmakers, as he was in the previous fight – delivered a pin-point left hand in the fifth to again send Haye down.
Haye nodded to acknowledge the shot and rose, only to be placed under intense attack, prompting referee Howard Foster to stop the fight, sending Bellew racing to the corner of the ring in celebration.
Bellew, 35, looked overjoyed and close to tears as he surely ended a rivalry which had been a focal point in British boxing for more than 18 months.
Haye, 37, admitted he needed a spectacular win to prolong his career but surely now the former worldheavyweight and cruiserweight champion has nowhere to turn.
Everton are quick to praise the achievements of their biggest fans
“You don’t understand what this man has been through,” says Tony Bellew’s trainer Dave Coldwell.
Bellew turns up and thoughts turn to his late brother-in-law Ashley: “I’m just so confused. My mind is going everywhere. I just fight. I’m born this way. I can get in the ring. Everyday I’ve spent in the gym.
“I’ve always studied the legends who fight on the inside. These big men don’t fight inside these days. I knew he could knock me out at mid-range.
“Dave was telling me David wanted to end it with a left hook. No man knocks me out with that shot, it’s impossible.”