The side welcomed neighbours Gala Rugby Club to the Greenyards for the annual showdown and emerged as winners by a score line of 27-24.
The Boxing Day tradition was watched on by an impressive 2,500 people on Friday (December 26).
Melrose took an early lead to go 5-0 up but were then pegged back by Gala pressure, with the visitors earning seven points to their name.
The game ebbed and flowed and Melrose enjoyed a spell of dominance, which saw their tally rise to 17 over Gala’s seven.
On the cusp of half-time, the visitors cut the deficit down to just three points as they saw their total increase to 14.
The hosts, determined to see the illustrious trophy stay at the Greenyards for a third year, then catapulted their way up to 24 points.
Gala refused to back down however and drew level with their rivals to set up an edge-biting finale.
The final points of the day, however, went to Melrose and as the full-time whistle was blown, celebrations erupted at the Greenyards.
A spokesperson for Melrose Rugby Club said: “A great game against Gala on Boxing Day sees us retain the Waverley Cup for the third time in a row.
“Thank you to everyone who came down to the Greenyards on Boxing Day. The official count for spectators was well over 2,500.
“What a great advert for Borders Rugby and the game certainly lived up to the occasion.”
A spokesperson for Gala Rugby Club said: “A massive away effort for our Maroons, but ultimately just short in the end.
“The Waverley Cup remains in Melrose until next year.”