Djokovic, bidding to win the prestigious title for the fifth straight time to topple Andy Murray from top spot, had to survive a scare against his Austrian opponent as he lost a tense first set tiebreaker, 12-10, having saved six set points.
In his frustration, Djokovic fired a ball into the crowd and earned a warning for unsportsmanlike conduct from umpire Carlos Bernandes.
Pressed on the issue after the match, the irritated second seed responded caustically to the gathered media.
"It could have been (serious), yes. It could have snowed in O2 Arena as well, but it didn't. It is not an issue for me. It's not the first time I did it," he said.
Clearly fired up, the Serbian hit back to sweep the remaining two sets for a 6-7 6-0 6-2 victory in just over two hours at the 02 Arena.
He will next opponent in the group will be fourth seed Milos Raonic, who beat Gael Monfils 6-3 6-4 in the later match Sunday.
Canada's Raonic has made a swift recovery after being forced to withdraw from the Paris Masters with a thigh injury
and had too much power and precision for the popular Frenchman, making his debut at the tournament.
Djokovic lost his No.1 ranking when Murray won the Paris Masters last weekend,
the Briton on a streak of four straight tournament victories.
Murray begins his campaign Monday against Croatia's Marin Cilic.
Stan Wawrinka and Kei Nishikori make up the other members of the John McEnroe Group in the eight-man elite field.
But the focus is on the battle for supremacy at the top of the rankings, with Djokovic hoping to return to his early season form which saw him take the Australian and French Open titles.
He said Thiem, the final qualifier for London in his breakthrough season, had been a tough opponent.
"Even though I lost the first set, I thought I didn't do too many things wrong. It was just the very high quality of his game that prevailed in the first set," Djokovic told the official ATP Tour website.
"I started swinging more freely in the second set. He started making more errors, which I used. I was on top of his second serves, putting a lot of pressure. I thought I played very well in the second set especially, but the third as well."
Djokovic, with an 18-1 record on the same court in the last four years, took just 22 minutes to win the second set for the loss of just 10 points and was quickly on top in the decider.
In other tennis action Sunday, the Czech Republic won a dramatic final against France 3-2 in Strasbourg to clinch its third straight Fed Cup crown.
Karolina Pliskova and Barbora Strycova paired to beat French Open doubles champions Caroline Garcia and Kristina Mladenovic 7-5 7-5 in the deciding rubber.
Earlier, Strycova had drawn the Czechs level when she saw off Alize Cornet 6-2 7-6 in the final singles rubber. She replaced injured two-time Wimbledon champion Petra Kvitova for the key encounter.