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 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."
In the first game, Safina double-faulted three times, including on break point. Williams ran off 18 of the last 20 points in the first set to finish it in 22 minutes.
"I saw it was so fast," Williams said. "I just said, 'I want to stay focused.' She's a warrior. She never gives up."
It was Williams' second overwhelming victory in a final at Melbourne Park, where she kept alive her record of winning in odd-numbered years since 2003. Coming into the 2007 tournament unseeded after being plagued by injuries the year before, she beat top-seeded Maria Sharapova 6-1, 6-2.
Sharapova rebounded to win last year but was unable to defend her title while recuperating from a shoulder injury.
Williams was the fifth woman to win four or more Australian titles. By making the singles and doubles finals, she already had become the all-time leading money winner in women's sports.
For winning the Australian singles title, she earned $1.3 million and now has career earnings of more than $23.5 million.
After Melbourne's hottest three-day heat wave on record, conditions were relatively mild for the tournament's first women's final at night, but Rod Laver Arena was less than capacity, with large patches of empty seats scattered around the upper deck of the 15,000-seat stadium.
Safina had been hoping to add to her family's Grand Slam total brother Marat Safin won two, including the 2005 Australian Open. She also will have to wait for a chance to match his one-time No. 1 ranking.
But Safina looked nothing like the player who won four titles and the Beijing Olympics silver medal last year. Increasingly dispirited, the crowd tried to encourage her, and she managed to break Williams in the first game of the second set.
It just delayed the inevitable.
Williams took the next four games, and things got so bad that Safina swung and completely missed a forehand while serving at 2-5. She managed to win the game, but Williams held at love when Safina sent a backhand wide on match point.
Williams went over to slap hands with her mother and other people sitting in her box as Safina, looking shellshocked, sat in her chair waiting for the trophy presentation. She grimaced when Williams thanked her "for putting on a great show for women's tennis."
It was Williams' 20th overall Grand Slam title. She won her eighth women's doubles crown with sister Venus on Friday and has two mixed-doubles championships.
On Sunday, top-ranked Rafael Nadal will face No. 2 Roger Federer in the men's final. Federer will be trying to tie Pete Sampras' record of 14 major titles, while Nadal is seeking his third Grand Slam out of the last four, missing only the U.S. Open last September that was won by the Swiss star.