Three-time surfing world champion Mick Fanning has just missed out on a fairytale finish to his career after being defeated in his last world tour event at Bells Beach.

Brazil's Italo Ferreira scored 15.66 to beat Fanning's 12.83 in the final.

Fanning first rose to surfing prominence in the event on Victoria's Surf Coast in 2001, and went on to win the title again in 2012, 2014 and 2015.

Today's final got off to a slow start but conditions slowly improved, as hundreds of fans lined the beach to cheer Fanning's every move.

But the atmosphere soon changed to nervous energy as Fanning sat in second place with only minutes remaining.

With the swell dying down, the fairytale final wave never eventuated, and as the seconds ticked by, Ferreira embraced his opponent in the water.

After being chaired up the beach by the crowd, Fanning said it was a very special moment.

"Just to see how much it meant to Italo made me feel a lot better," he laughed.

He joked it would take him two years to send text messages to all the people he wanted to acknowledge.

"I've learnt so much and I walk away with so many great memories, not only in the surf but on land and travelling with people, so thank you," he said.

"I tell you what I won't miss is those 6:30am starts."

Mick Fanning thanks fans as he is carried up Bells Beach. ( Fox Sports/World Surf League )

Ferreira, 23, said the win — his first ever on the pro tour — against one of his heroes was "unbelievable".

"I don't know, how can I say it? I'm just so happy. That's my job, that's what I'm looking for — the win and making some sick hits," he said.

"Mick is one of my favourites, he's the best competitor ever, and I just want to say thank you to Mick for everything."

Fellow Australian Stephanie Gilmore today won her fourth Bells Beach event by defeating Hawaii's Tatiana Weston-Webb in the final.

The win means she is now ranked number one on the championship tour.

'White Lightning' helped lift surfing standards

Fanning had progressed to the final by beating American Patrick Gudauskas in this morning's semi-finals and good friend Owen Wright in the quarter-finals in perfect conditions.

He has won 22 world tour events, including four at Bells, but has decided to call it quits after this event, saying the hunger to compete is no longer there.

"I'm not too fussed [about winning]," Fanning said ahead of the tournament.

"I just want to go out there and put on a good performance."

Fanning won his first Bells title as a teenage wildcard entry in 2001.

He brought a new level of competitiveness to the sport and quickly became known as "White Lightning" for the way he attacked the wave.

In his first full year on tour, Fanning finished fifth, but a hamstring injury threatened to bring his career to a premature end.

After months of rehabilitation, he managed to win his comeback event, and in 2007 he won the first of his three world titles.

He took some time off following his infamous encounter with a shark in South Africa in 2015 and the death of his brother later that year.

He has been made an officer of the Order of Australia for his work in and out of the surf.