The 26-year-old Finn made an early break and engaged in a frenetic battle over the last 15km with Alexander Bolshunov before surging away to take Finland's first gold medal of the Pyeongchang Games on the penultimate day of competition.
"Sisu is the spirit of fighting -- it means you never give up," Finland team coach Teemu Paasanen told Reuters after witnessing Niskanen's superb victory.
Niskanen was reeled in by Bolshunov, of the Olympic Athletes from Russia (OAR), but a change of skis late on gave him new impetus and he was able to sprint away from his rival.
"We decided that we would change the skis because fresh skis are so much quicker than skis that have been used for 20km," Paasanen explained.
"That was an example of the sisu - you get the 10 seconds that he was behind, and then you fight for the gold," Paasanen said.
"It is a very strong mental thing for us -- if we decide to do something, we do it, and with Iivo there was lots of sisu today," Niskanen's friend and team mate Ristomatti Hakola told Reuters.
"There is some mythology also but it's true that it's in the Finnish people. It's a very strong mental thing."
Winter sports are hugely popular among the Finns but results have not always been great for the Nordic underdogs.
"It's very important that we get it (the gold) from cross-county skiing, and for me it's very important that one of my best friends gets the gold medal, and it's very important for Finnish cross-country. It's a very big thing," said Hakola.
(Editing by Clare Fallon)
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