The Dane, who will take over as world number one, burst into tears as she secured the title against the battling Romanian top seed on her first match point of a gruelling, epic encounter.
Both players needed medical attention on court before the Dane prevailed in 2hr 49min in energy-sapping hot and humid conditions on Rod Laver Arena.
Wozniacki, 27, has long carried the unwanted moniker of best player never to win a major, having reached the US Open final in 2009 and 2014, and first becoming number one in 2010.
Both of them were in their third major final -- their first in Australia -- and both had saved match points in earlier rounds to get there.
Wozniacki started the stronger and broke Halep's opening service game with the early evening temperature still above 30 Celsius (86 Farenheit).
The Dane sped into a 3-0 lead behind a consistent first serve.
Wozniacki had not won a set in either of her previous two Grand Slam final appearances and tightened visibly serving for this one at 5-3. Halep aggressively took advantage and moved to three break points at 0-40.
A big second serve and a first ace saved two of them but the relentless Halep forced Wozniacki long with a sliced forehand and the final was back on serve.
In the tiebreak the Dane went 4-1 up before a second mini-break and two solid serves gave her the tiebreak 7-2.
Wozniacki was growing in confidence and Halep needed to save four break points at 1-1 in the second set in a brutal game that lasted 11 minutes.
Soon after Halep signalled to her coach Darren Cahill in the player's box that she wasn't feeling well and there were worrying scenes as she had her blood pressure taken and an ice towel applied in the next changeover.
Halep re-emerged with her energy drained and needed the luckiest of net cords to hold for 4-3.
Cramping and almost limping, she decided to stand and deliver in the next game, keeping the points short.
Incredibly the tactic paid off as she broke Wozniacki with a ripping drive up the line and served at 5-3 to level the match.
Wozniacki forced two break back points which Halep saved, before levelling on her third set point.
The tournament's extreme heat policy was invoked meaning the players took a 10-minute break before the start of the third set.
When they resumed Wozniacki held before wearing Halep down with a series of long rallies and securing the break for 2-0 as the match clock hit the two-hour mark.
Halep dug deep and got it back to 2-1 on her sixth break point of a gruelling game when Wozniacki double-faulted after almost 12 minutes.
Both players were feeling the heat and two more breaks of serve were exchanged as they struggled to find any rhythm until Halep held for 3-3.
Wozniacki's weaker forehand let her down twice from deuce and Halep led for the first time in the match at 4-3.
Now it was the turn of the Dane to call the physio. With her left knee freshly strapped she broke Halep yet again to level at 4-4.
Finally, having not held since the first game of the third set Wozniacki managed it again and crucially led 5-4 with Halep having to serve to stay in the match.
She couldn't manage it and a backhand into the net brought an end to her brave challenge.