The co-hosts took full advantage after winning the toss as Steve Smith struck 105 from 93 balls to help his side post 328-7 from their 50 overs.
MS Dhoni's 65 couldn't make the difference as India struggled to keep up with the required run-rate before eventually being dismissed for 233 in the 47th over.
Read below to find out how Australia set up a meeting with New Zealand in Sunday's final.
INDIA: Rohit, Dhawan, Kohli, Rahane, Raina, Dhoni, Jadeja, Ashwin, Mohit, Shami, Yadav
"They've worked out how to take wickets and score runs, and they've shown that through this tournament. MS Dhoni deserves a lot of credit for the way he's captained, especially after being defeated in the Test series and the tri-series," the Australian skipper told reporters.
Fall of wickets: 15-1 (Warner 12), 197-2 (Smith 105), 232-3 (Maxwell 23), 233-4 (Finch 81), 248-5 (Clarke 10), 284-6 (Faulkner 21), 298-7 (Watson 28)
Bowling figures: Shami 10-0-68-0, Yadav 9-0-72-4, Mohit Sharma 10-0-75-2, Kohli 1-0-7-0, Jadeja 10-0-56-0, Ashwin 10-0-42-1