Francis Friel's side beat the favourites Donaghmoyne of Monaghan 4-7 to 3-8 at Brewster Park.
Geraldine Mc Laughlin scored 4-4 for Termon.
The Donegal champions led by seven points at one stage only for Donaghmoyne to come back and level the game up at 2-7 apiece.
McLaughlin's goals would however seal a second Ulster title for Termon.
Elsewhere in the Intermediate Final, Four Masters drew with Monaghan Harps 2-5 1-8 and on Saturday Carndonagh lost to St Dympna's 2-11 to 3-7 in the Junior Ladies Final.