6-7 6-3 10-6. Their win gave World their first point of the tournament against the Europeans.
"I'm just happy to get the win and we defended the title, that's the most important thing".
World number two Federer was due to open the final round of singles matches, facing Isner.
They paired up for Team Europe against Team World on day one of the Laver Cup in Chicago, but suffered a 6-7, 6-3, 10-6 loss to Jack Sock and Kevin Anderson.
Federer kept up the pressure to break in the first game of the second set and continued to dominate from every area of the court.
Europe skipper Bjorn Borg meanwhile praised the performance of the World team, who were captained by his old rival John McEnroe.
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Federer and Djokovic didn't have quite the same buzzing chemistry like Federer had with Rafael Nadal past year.
The next Laver Cup, which is named after Australian legend Rod Laver, will be staged in Geneva in September 2019. But, the American and South African pair came back stronger in the second set and took it 6-3 to take the game into a tie-breaker.
Team Europe need another six points to retain the title they won in the inaugural competition past year.
With each rubber worth three points to the victor, two more wins for Europe or the World team will clinch the title.
Under the format being used for the tournament, a 10-point tiebreak is used instead of a decisive third set.
On day 2, each match will be worth two points.
Each player will play at least one singles match during the first two days.