The Shire shocked the visitors by going ahead after just four minutes. Paul Tweedie's shot struck a defender and bounced nicely into the path of Derek Ure who kept his composure to steer the ball past John Dodds.
After that the visitors gradually gained control and John Bradford almost equalised with a low shot which was just wide of the post.
The Fifers eventually levelled just before the half-hour mark, when a neat back heel from former Shire player Kevin Gordon created an opening for Craig Smart to slot home from inside the box.
Shire survived a hectic defensive battle just prior to the break when keeper Derek Jackson had to pull off three outstanding stops from Paul Hampshire, Gavin Beith and Gordon to keep his side in the game.
Gordon also had a shot which struck the post and went behind for a goal kick.
The second half was a bit of a let down for East Fife considering that they had dominated the latter part of the first half.
The winner came against the run of play with five minutes left when Ure provided the cross for Carl Thywissen to power a header past John Dodds.