You are not permitted to download, save or email this image. Visit image gallery to purchase the image.
It was a second successive Grand Slam crown for the Japanese, after her US Open triumph in September, and she became the first Asian player to claim the world number one ranking in the process.
Kvitova saved four matchpoints, showing the same resilience she needed to return to the top level of tennis after a knife attack and lengthy surgery in 2016, but her fightback fell just short.
Osaka shed tears after losing the second set from a 5-3 lead but returned to court after a washroom break calmer and more composed.
She broke Kvitova in the third game of the final set and converted her fifth matchpoint to end a superb final in two hours and 27 minutes, receiving the acclaim of the crowd in stark contrast to her last Grand Slam success.
While she had heard only boos from an angry and frustrated crowd after defeating home favourite Serena Williams in an ill-tempered U.S. Open final, on Saturday she received a proper coronation from an approving audience at the Rod Laver Arena.
"Hello, sorry, public speaking isn't really my strong suit so I just hope we can get through this," Osaka said after receiving the Daphne Akhurst Memorial Cup from former champion Li Na and a winner's cheque for $A4.1 million ($US2.95 million).
"Huge congrats to you Petra, I've always wanted to play you and you've been through so much. You're really amazing and I'm really honoured to have played you in the final of a Grand Slam."
The 21-year-old Osaka became the youngest women's world number one since Dane Caroline Wozniacki, who was 20 when she topped the rankings in 2010.
For Kvitova, simply being in a Grand Slam final was a triumph of sorts.
She had missed the tournament two years ago while recovering from an attack by a knife-wielding home intruder that left her with a stab wound to her racket hand.
"It's crazy, I can't believe I just played a final of a Grand Slam again. It's been a while in a final for me," said an emotional Kvitova.
"But mostly thank you (to my team) for sticking with me even (if) we didn't know if I would be able to hold this racket again."
Osaka took the first set on a tiebreak after both players had exhibited their entire array of shots in a high-quality opening to the match.
Kvitova's serve, which looked impregnable during the early games of the opening set, suffered a dip as Osaka took up unconventional receiving positions, forcing the Czech to make adjustments.
Osaka had won 59 straight matches after taking the first set before Saturday's final and showed why as her serves grew bigger and the winners flowed from her racket in the second.
After an early trade of service breaks in the second set, the Czech's confidence appeared shaken and she was broken to love before Osaka held her serve to win a fourth straight game.
But the 28-year-old Czech, who had lost just seven out of 33 career finals before Saturday, fought back with booming serves to save three matchpoints and hold for 4-5, before breaking Osaka to draw level.
A teary-eyed Osaka could not stop Kvitova's fightback as the Czech won four straight games to win the set after the Japanese served her fourth double fault.
A break in the third game of the decider, however, proved enough for Osaka, who fell to her knees as Kvitova's forehand went wide to hand her the title.