The Red Bull junior claimed the lead in the opening stages before withstanding intense pressure from Martins, who'd moved up from 10th on the grid, in the closing laps.
Theo Pourchaire meanwhile crashed out after an ambitious move saw him plough into Ollie Bearman to draw one of two Safety Cars.
Jak Crawford maintained his advantage from pole to lead through the first corner followed by Iwasa who started strongly.
Jack Doohan found himself off the road through the opening sector to drop a place behind Bearman.
Iwasa swept around the outside to claim the lead at the opening turn as the field began Lap 2.
In the pack, Zane Maloney spun at Turn 2, losing the rear end to draw the Safety Car.
The race resumed with 16 laps to go, Iwasa holding his advantage over Ralph Boschung who'd climbed to second.
A move from Pourchaire saw the championship leader move up to seventh at the start of the next lap, putting a move on Kush Maini with a late move under brakes at Turn 1.
Looking to repeat the move there was contact between Pourchaire and Bearman at Turn 1, firing both off the road.
It was a late move from the Frenchman which drew the Safety Car for the second time in the early stages.
Having gone late on the first restart, Iwasa went early this time to jump clear and hold a comfortable advantage.
Behind, Martins claimed fourth over Crawford into Turn 1.
Doohan then found himself in a scrap involving Maini, Crawford, and Frederik Vesti over fifth through eighth.
It saw them run three wide down the pit straight as they began Lap 11, the Australian having to back out to avoid contact as they jostled for position.
Martins kept charging forward with a combative drive, outfoxing Jehan Daruvala to find himself second with three laps to run.
He saw his opportunity when Daruvala had attacked Iwasa but wasn't able to make the move stick, running wide at Turn 1 to open the door at Turn 2.
Boschung had slipped to fourth in the squabbling at the front of the race while Doohan fell to eighth as Vesti made progress.
Heading into the final lap, Iwasa was forced to defend into Turn 1 as Martins attacked.
The Japanese driver then eked out a gap on the final tour, pulling sufficiently clear to cover the risk posed by DRS in the run to the chequered flag.
He held on to win from Martins with Daruvala rounding out the top three.
Doohan made a place on the final lap to finish seventh as Crawford fell to ninth, 0.023s behind Dennis Hauger who claimed the final points-paying position.
The F2 Feature race follows on Sunday at 16:15 local time (00:15 AEDT).