The Belorussian took just one hour and 22 minutes to see off her Russian challenger, who won the title back in 2008.
Azarenka's victory, which comes in her first appearance in a grand slam final, also sees her succeed Caroline Wozniacki as the world number one.
The 22-year-old made a tentative start to the match losing her opening service game with Sharapova backing up the break with a service hold.
At 0-30 down in the third game she was in danger of handing the five-time grand slam winner a decisive advantage, but Azarenka fought back to win the next four points and the game to keep the Russian in her sights.
From that point on she didn't look back, out-powering and in many rallies outwitting her more experienced opponent.
She immediately broke the Sharapova serve and backed it up with another break in the eighth game before serving out the set.
It was one-way traffic in the second set as Azarenka grew in confidence and Sharapova's challenge faded.
Break points in the first, third and fifth games were all greedily snapped up as Azarenka romped to the title.
"I can't wait to be back next year, I've had an amazing month in Australia. It's a dream true," Azarenka said afterwards, AFP reported.