George brought a 14-1 record into the contest, but the Australian struggled to match the hometown fighter during a one-sided fight in the North-East.
Kelly knocked George off balance in the opening round as the Australian found it difficult to come to terms with the Sunderland-born fighter's quick hands.
It was a similar story in the second round as Kelly danced away from his opponent, although George showed his fight in round three as the more experienced fighter quietened the crowd.
Kelly took two big punches from George in the final stages of round four, but the 24-year-old mockingly let out a scream before answering back with a couple of shots of his own.
Kelly upped the tempo in rounds five and six as George started to retreat, and that continued into round seven as the home fighter looked to end the contest.
George was clearly feeling his right hand at the end of round seven, and the Australian's team decided to pull him out of the contest with the injury - handing Kelly his seventh professional win and the Commonwealth welterweight title in the process.