The 27-year-old Williams knew going into the final that the winner would grab the top ranking.
She left no doubt she deserves it.
Williams routed Dinara Safina 6-0, 6-3 in 59 minutes. She was so overwhelming that third-seeded Safina apologized to the crowd for her performance, saying Williams left her feeling like a ballboy.
Other than matches that ended early due to illness or injury, it was among the most lopsided Australian Open women's finals ever.
Williams still remains far away from the women's record for Grand Slam singles titles. Margaret Court Smith had 24 and Steffi Graf 22, with Martina Navratilova among the others she would have to pass.
Thanks to her power game and what she has called her toughest off-season training regime - she has been criticized in the past for not putting in enough work outside of tournament - Williams is moving up fast and will go into the French Open with a two Grand Slam winning streak after taking the U.S. Open in September.
"I idolized Steffi Graf growing up," Williams said. "Martina Navratilova was someone who was my role model. Now people are starting to talk about me, which is uber cool. I can't get my mind around it."
The victory was all the more remarkable because she had looked so vulnerable earlier in the tournament, once loudly cursing her first service. But as she has done at Melbourne Park before, Williams managed to survive until it all came together.
"I was playing lazy tennis in the beginning and I was doubting myself in the beginning," she said. "I'll thank my mom for hanging in there this week. The first week was tough, but we got through it."
Williams finished with 23 winners and just seven unforced errors in the final, winning more than twice as many points as Safina.
"I absolutely, clearly, love playing here," Williams told the crowd. "You guys root for me so much. I don't get that everywhere. So thank you so much."
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