Denis Hickie celebrates scoring Ireland's first try
Ireland (15) 21
Tries: Hickie, Murphy
Pens: O'Gara (3)
Australia (3) 6
Pens: Mortlock (2)
Ireland secured back-to-back wins over southern hemisphere sides for the first time with a powerful display against Australia at Lansdowne Road.
Eight days after beating South Africa, Eddie O'Sullivan's side were 15-3 up at half-time thanks to tries from Denis Hickie and Geordan Murphy.
In blustery and wet conditions, the Wallabies were restricted to two penalties from Stirling Mortlock.
Ronan O'Gara landed three penalties for Ireland plus a conversion.
Ireland's first-half display was particularly impressive and earned them a standing ovation from the Dublin crowd.
Skipper Mortlock's penalty had given Australia a 3-0 lead after just four minutes but the Irish responded with series of attacks, stretching the tourists' defensive line to the limit.
Ireland appeared to have crossed in the right corner through Murphy but the television replays showed the Leicester full-back had not quite got the touchdown.
Instead, play was taken back to a penalty which O'Gara landed off an upright.
Ireland got the try they had been threatening on 25 minutes when O'Gara spotted Hickie on the left touchline and fired a cross-field kick which the Leinster winger gathered before jinking between three defenders to score.
Australia's problems deepened when fly-half Larkham limped off and was replaced by Mat Rogers.
Ireland extended their lead in the final minute of the first half with a stunning try.
Superb handling from O'Gara released Gordon D'Arcy, who rushed forward before feeding Horgan and the big Leinster man, about to be hurled into touch, passed back in to Murphy, with O'Gara converting.
The pace slackened in the second half with Mortlock landing one penalty followed by two from O'Gara.
For 10 minutes it was 14 players against 13 as Ireland's Denis Leamy and Aussie pair Rogers and Phil Waugh were sin-binned for fighting.
Hickie went close to getting another try but Ireland had already done enough and ended with a thoroughly deserved victory - only their second over Australia in 27 years.
Ulster flanker Neil Best was named man of the match.
Ireland: G Murphy; S Horgan, B O'Driscoll (capt), G D'Arcy, D Hickie; R O'Gara, I Boss; B Young, R Best, J Hayes; D O'Callaghan, P O'Connell; N Best, D Wallace, D Leamy.
Replacements: F Sheahan, M Horan, M O'Kelly, S Easterby, P Stringer, P Wallace, G Dempsey.
Australia: C Latham; C Rathbone, L Tuqiri, S Mortlock (capt), M Gerrard; S Larkham, M Giteau; A Baxter, T McIsaac, G Shepherdson, N Sharpe, M Chisholm, R Elsom, P Waugh, W Palu.
Replacements: S Moore, B Robinson, A Campbell, G Smith, J Valentine, M Rogers, S Staniforth.
Referee: Marius Jonker (South Africa)