Kerber, seeded seventh, won an exciting last 6-4 3 6-4 at Melbourne Park.
The 28-year-old is the primary German to win a noteworthy singles title subsequent to Steffi Graf at the 1999 French Open.
Williams, 34, was beaten for simply the fifth time in 26 Grand Slam finals, and the American missed the opportunity to tie Graf's open-time record of 22 titles.
Kerber, who spared a match point in her first-round win over Misaki Doi, will climb to number two on the planet rankings.
Kerber blunts Williams' energy amusement
Kerber had won only one of six past matches against Williams and was making her Grand Slam last introduction, however, she was the better player more than two hours and eight minutes on Rod Laver Arena.
She drove Williams in the expert number until the last stages, restricting her to only seven in general, while the American racked up 46 blunders to only 13 by Kerber.
Williams committed 23 errors in the principal set alone - starting recollections of her frantically anxious presentation in losing to Roberta Vinci at the US Open last September - and Kerber took a full point of interest to claim it following 39 minutes.
Nonetheless, the safeguarding champion slice her blunder include to only five the second set and guaranteed it on account of a solitary break in diversion four.
Kerber twice pushed forward in the decider and a shocking 6th amusement saw the German produce two fine drop shots and win an amazing 19-stroke rally to stick on to her serve and edge closer to triumph.
Nerves grabbed hold and she was broken while serving for the match, yet she dispatched into the Williams serve by and by and secured the title when the world number one sent a volley long.
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