Maika Hamano scored the decisive goal in the 17th minute, turning five metres outside the box and firing the ball past diving Australia goalkeeper Mackenzie Arnold and into the corner of the net.
Australia's Matildas, Asian champions in 2010, gave as good as they got in a high-quality final and ultimately paid the price for their inability to convert the chances they created.
Record goalscorer Sam Kerr was well shackled inside the penalty box and her fellow striker Caitlin Foord failed to make the most of a string of chances.
The Nadeshiko were forced into desperate defence in the final 10 minutes as Australia, roared on by the largest crowd in Women's Asian Cup history, poured forward in search of an equaliser.
Substitute Emily van Egmond had two shots blocked and Alanna Kennedy's header from Ellie Carpenter's cross was well saved by Japan goalkeeper Ayaka Yamashita.
Former world champions Japan, playing in their seventh Asian Cup final, held on to add another Asian title to their 2014 and 2018 triumphs.
"The girls fought with everything they had and I'm really proud of them," said Japan coach Nils Nielsen. "It was difficult to get really fluent in our game. They really deserve it, I mean we won six games so I think it's okay that we take the trophy."
Australia were left to rue missed chances.
"They scored a wonderful goal in the first half, and we didn't," their coach Joe Montemurro said.
"We had opportunities and they had a couple of opportunities too. It was a tight game but currently Japan (are) this amazing team."
Foord had a chance to give the Matildas the perfect start in the 11th minute after being played through but fired her shot straight at Yamashita.
Yamashita handed Foord another opportunity with an errant pass but the Arsenal striker could not get the angle for her shot.
Japan were also creating chances with their crisp passing and runs down the flanks and Arnold got down well to cover a first-time effort from Hikaru Kitagawa.
Another opportunity for Australia came courtesy of a Kerr pass just before halftime but although Foord got a nice first touch on it, she screwed her shot well wide.
After the break, Japan's Riko Ueki had two chances in three minutes to add to her tournament-leading tally of six goals but headed Kitagawa's pinpoint cross wide before firing the second effort straight at Arnold in the Australia goal.
The Nadeshiko were tested in the second half as they had not been before over their three weeks in Australia but, having scored 29 goals and conceded one in their six games at the tournament, were worthy champions.
Defeat was heartbreak for Australia's golden generation, who had been hoping to finally win a major title on home soil three years after reaching the semi-finals of the Women's World Cup the nation hosted.
"Probably one of the hardest (losses) in my career," said defender Steph Catley. "I just think we did everything we could have. We were brave and created chances and it just wasn't to be."