A first-half goal from Maika Hamano was all that separated the two sides in front of 74,397 at Stadium Australia as Japan claimed their third Asian crown.
After cantering through to the final, Japan were put under siege by the Matildas for large parts of Saturday's match, but the home side were unable to land a killer blow.
Joe Montemurro's outfit were more than a match for the Japanese, but will be left kicking themselves about their inability to find the net when it mattered most.
Captain Sam Kerr and Mary Fowler were contained more and more as the match wore on, and the usually clinical Caitlin Foord butchered two golden opportunities in the first half.
"The final scenario didn't happen for us, we created enough but it didn't go in - that's football at this level," a crestfallen Montemurro said.
"We created more chances tonight than we probably did all tournament and didn't score.
"I'm proud to be the leader of this great football nation. I've got 26 warriors out there who have been fantastic for 21 days."
Fowler created two brilliant chances inside the opening 10 minutes, the first after just 90 seconds that resulted in a scuffed Kerr shot being parried away by Ayaka Yamashita.
The goalkeeper was again called into action as Foord, off the back of another piece of smart play from Fowler, fired a big chance straight into the arms of the Japanese No.1.
And after surviving an early onslaught of Australian fight and fire, Japan slipped back into the groove that has made them the dominant force at this competition and found a goal in the 16th minute.
The Matildas had done well to contain Japan's attack, but a momentary switch-off from Alanna Kennedy and Kyra Cooney-Cross was all Hamano needed.
The forward unleashed from the edge of the box and her dipping shot sailed past Mackenzie Arnold and into the back of the net.
Australia kept the Japanese at bay for the remainder of the first half and should arguably have gone in at halftime level.
Foord couldn't get a shot on target when Yamashita made a blunder at the back, and the Arsenal striker then fluffed her best chance of the night on the stroke of halftime after a brilliant cross from Kerr.
Montemurro resisted halftime changes as Japan pressed for a second, with Riko Ueki, who finished with the tournament's golden boot with six goals, flashing a header wide and also forcing a save from Arnold.
Hayley Raso was thrown into the mix by Montemurro, but Australia still struggled to draw level despite looking the more dangerous side.
Foord found Kaitlyn Torpey unmarked in the box with 25 minutes left, but the left-back mis-hacked another chance inside the Japanese box.
Kennedy, who has named player of the tournament, had the best Australian chance late in the second half.
But she could only guide her header into Yamashita's grasp as Japan claimed victory and the Matildas' 16-year wait for a major trophy rolled on.
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