The triumph means the world number one overtakes 18-time major champions Martina Navratilova and Chris Evert to go a clear second on the all-time Open-era winners' list, three behind Steffi Graf on 22.
It also extends her staggering decade-long dominance of arch rival Sharapova, with the world number one posting her 16th straight victory over the Russian.
At 33, she also became the oldest woman to win the title in the Open-era, taking her tally at Melbourne Park to six titles in six appearances in the final.
The first Australian final in a decade to feature the tournament's top two seeds was a one-sided affair in the first set although Sharapova rallied to make a contest of it in the second.
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An intensely focused Williams outgunned Sharapova, cannoning down 18 aces, including a 203 kmh (166 mph) thunderbolt and glaring at her opponent during key moments as Sharapova struggled to stay in the march.
The American then pounced on a tentative return from Sharapova in the next game to hold serve after swatting a pin-point backhand to the corner of the court.
Sharapova, wary of getting into a slugfest with the game's most powerful hitter, surprised Williams by throwing occasional drop shots into the mix, successfully holding serve.
Heavy rain interrupted play at 3-2, with Williams taking shelter and towelling down as the roof was closed, while Sharapova sat courtside then performed warm-up exercises.