Australia completed a remarkable win by an innings and 18 runs against Pakistan in the second Test to seal a series victory.

A draw looked almost certain heading into day five at the MCG, but the tourists collapsed to fall 2-0 behind in the three-Test series.

Steve Smith (165 not out) and Mitchell Starc (84) helped the hosts to 624-8 before they declared with a lead of 181.

That proved to be more than enough as Starc (4-36), Nathan Lyon (3-33), Josh Hazlewood (2-39) and Jackson Bird (1-46) saw their side to victory, as Pakistan were bowled out for 163.

Only Azhar Ali (43) and Sarfraz Ahmed (43) provided any real resistance as Pakistan lost a Test which had been hugely affected by rain.

It sees Australia head to Sydney looking for a series sweep starting January 3.

That had looked unlikely when they resumed at 465-6, but a combination of poor bowling and fielding and some big hitting gave them hope.

Sohail Khan dropped a sitter at long-off when Starc was on 51, and the Australia paceman finished with seven sixes and three fours in his innings.

Smith brought up 150 but decided to declare when Lyon (12) departed before lunch.

That decision paid off in just the second over, Sami Aslam (2) playing a Hazlewood ball onto his stumps.

Starc would strike with the first ball after the break, trapping Babar Azam (3) in front despite a review by the batsman.

Younis Khan and Azhar steadied the innings before Lyon helped shift the momentum once more.

Younis (24) was caught well by Peter Handscomb at short leg and just two balls later, Misbah-ul-Haq (0) fell in dreadful fashion.

The captain had swept his first ball before deciding to go for the same shot off his second, picking out Nic Maddinson at short fine leg.

Handscomb and Lyon combined again to remove Asad Shafiq (16), the former taking a brilliant catch.

Azhar was trapped in front by Hazlewood and had to go despite a review and Australia closed in on victory when Bird bowled Mohammad Amir (11).

The excellent Starc took the final three wickets, bowling Sarfraz and Wahab Riaz (0) before Yasir Shah (0) skied one to Bird to end the match.