The Serbian won the match in about two hours and four minutes to move ahead of six-time men’s winners Roy Emerson and Roger Federer.
Djokovic barely struggled on his serve as he won with a 6-3 6-2 6-3 game which is his biggest victory in a major final over his great rival.
Rafael Nadal looked shaky by the pressure in which Djokovic had to put on him by making 28 unforced errors.
The Serb has now won 13 of his past 16 meetings against Nadal who has not beaten the Djokovic on a hard court since the US Open final in 2013.
A forehand winner down the line brought up two championship points, Djokovic taking the second when Nadal clubbed a backhand long.
After winning the match point Djokovic fell to his knees after sealing another triumph on Rod Laver Arena, smacking the court with both hands and screaming towards the sky.
The Serbian claimed his 15th Grand Slam title, moving him outright third ahead of American Pete Sampras in the all-time list, closing in on Switzerland’s Federer (20) and Nadal (17).
Nadal lost was his fourth in Melbourne while Djokovic continued his fine record of going on to win the tournament every time he has reached the semi-finals.
The world number one made a fast start by breaking in Nadal’s first service game and, although that was the only break in the opener, the gulf between the players felt much wider.
With this result, Nadal was unable to become the first man in the Open era to win all the Grand Slams at least twice and was the first time he had lost a major final in straight sets.
Djokovic said his cool semi-final win over French 28th seed Lucas Pouille on Friday was one of his best performances on Rod Laver Arena.
Winners are grinners 😃🏆
— #AusOpen (@AustralianOpen) January 28, 2019
Two days later, he surpassed that against the man with whom he shares what many consider to be the greatest male rivalry.
Most expected a much closer encounter between the pair, whose previous meeting at Melbourne Park had been the epic 2012 final, which lasted five sets and almost six hours.
Quickly it became apparent that a repeat was unlikely in front of a stunned crowd.
Djokovic was as close to flawless as he could have been – dominating on serve, controlling the rallies with crisp groundstrokes, rarely making a mistake and showing incredible athleticism around the court.
He took his first set point after landing a first serve which Nadal could only bat back into the net, wrapping up the opener in only 38 minutes.
More pressure came on Nadal’s serve immediately in the second set, Djokovic eventually going a break up in the fifth game and, after surviving Nadal taking him to deuce in the following game, broke again to leave him serving for a two-set lead.
Djokovic then underlined his dominance by firing down three aces to leave him one set away from the title.
Another break for a 2-1 lead in the third put Djokovic on his way to a comfortable win, before he fought off a break point in the sixth game and then sealed victory on the Nadal serve.
Nadal had not dropped a set on his way to the final but having come into the tournament without competitive action since September’s US Open.
The Spaniard only managed one point in the opening three games and was looking like he lacked the confidence going into the match.
Nadal struggled to capitalise Djokovic’s serve by not managing to win a receiving point until the ninth game and with more than half an hour on the clock.
Nadal pushed on in the second and third sets although a rare error from Djokovic brought up a first break point for the Spaniard after an hour and 46 minutes.
A backhand into the net left Nadal frustrated and looking up the sky in agony as the chance and the trophy slipped from his grasp.
After the match, Here is what Nadal had to say
“I have been going through tough times over the past year. I only played in nine events and had to retire from two, and I was not able to play professional match since the US Open,” said Nadal.
The Spaniard, who cut short his 2018 season with an abdominal muscle problem and to have ankle surgery, retired injured in the quarter-finals in Melbourne last year.
“Even though tonight was not my night, it was very important for me in coming back from injury,” he said.
“I believe I played a good two weeks of tennis and it is a great energy and inspiration for what is coming.
“I will keep fighting and keep practising to give myself better chances in the future.”