Heartbroken as runner-up last year and in 2011, the 31-year-old struggled on serve and battled an errant forehand in a tight first set, before finding her range in devastating fashion to become the oldest woman to win at Melbourne Park.
Cibulkova gave up two match-points when the Slovakian pushed a backhand long and saved one of them when Li did likewise, but the 20th seed crumbled on the second to give the Chinese her second grand slam title after winning the 2011 French Open.
Asia's first grand slam singles winner, Li raised her arms in triumph and after shaking hands with her opponent, went straight to her section of the players' box to embrace her coach Carlos Rodriguez and members of her entourage.
"Finally I got her (trophy), last two times was very close," the beaming fourth seed said at the trophy ceremony.
"Congrats to Dominika, she had a great tournament. Max my agent, makes me rich, thank you. Thanks for Carlos, who always believed I could do it. We worked so hard in the winter.
"Thanks to my husband, now so famous in China, (my) hitting partner, fixes the drinks, fixes the racquets... You do a lot a lot of jobs. Thanks a lot, you are a nice guy. You were lucky to find me."
The pint-sized Cibulkova, who won plenty of admirers at Melbourne Park after upsetting Maria Sharapova and Agnieszka Radwanska on her way to the final, scrambled hard but was simply overpowered by Li's crunching groundstrokes in the second set.
"These were just the most fantastic two weeks of my life and I think I'm going to cry," the 24-year-old said.
"I would like to congratulate Li Na, she had a fantastic tournament, she deserves to be here as a winner."
After a nervous start for both players, Li was the first to settle and unleashed a blistering backhand down the line to gain a break point in the opening game against her feisty opponent, who promptly double-faulted on the next point.
Under pressure from the counter-punching Cibulkova, Li notched two double-faults in a row to be broken back in the sixth game and the Slovakian then held with a big serve to move 4-3 ahead.
Li broke Cibulkova for a second time in the 11th game and had a set point on serve at 6-5 but the 20th seed survived to take the opener into a tiebreaker.
The temperamental Chinese found her range in time to march to a 5-1 lead in the tiebreak but Cibulkova marshalled her defences with aplomb, scrambling to chase down everything and pulled back to 5-3.
Li then blasted a huge return to earn three more set points but only needed one of them when Cibulkova netted a backhand.
Once the first set was in the bag, Li appeared far more at ease and wound up a huge forehand down the line to bring up an early break point in the second and was soon 2-0 ahead when Cibulkova pushed long.
Growing in confidence, Li began to swing at everything and broke Cibulkova again to lead 4-0 before completing an emphatic victory in her third attempt at Melbourne Park, the grand slam venue she has long described as her favourite.
(Editing by John O'Brien)