India's hopes of making the finals of the series are left with them needing to beat Sri Lanka on Tuesday and get a bonus point.
Australia defeat India to seal place in the Tri-series final
India face a major task to reach the Tri-series one-day finals after an abject 87-run loss to Australia at the Sydney Cricket Ground.
India showed little fight in their chase after Australia's 252 for nine and were skittled for 165 off 39.3 overs.
The result means they must beat Sri Lanka by a bonus point in Hobart on Tuesday to have any chance of making the finals.
Australia are already through to the finals with their crushing bonus-point victory and have one more match to play against Sri Lanka in Melbourne on Friday.
It was another miserable night for India, who has showed little conviction during their tour to Australia, losing all four Tests, winning one Twenty20 match and going down in four of their seven ODIs with another match tied.
Man-of-the-match David Warner topscored with 68 off 66 in Australia's innings where Matthew Wade (56 off 66) and David Hussey (54 off 64) also contributed half-centuries.
India put in another woeful batting display and crashed to 104 for six in the 27th in a match where they always appeared to be struggling against the well-drilled Australians.
Tailender Ravi Ashwin topscored with 26 off 37 balls, while Sachin Tendulkar (14), Virender Sehwag (5) and skipper M.S. Dhoni (14) were all out cheaply.
Tendulkar yet again failed to score his elusive 100th international century and has scored just 104 runs in six knocks in the series at an average of 17.33.
Tendulkar was run out by a brilliant diving underarm throw down by David Warner, but the Indian great complained that his run was blocked by the follow through of paceman Brett Lee.
Sehwag again showed little accountability and was caught and bowled by Ben Hilfenhaus, while Dhoni pottered around 49 balls before he was leg before wicket to Hilfenhaus.
Shane Watson, leading the Australian side in the absence of sidelined skipper Michael Clarke who had back trouble, picked up two for nine in his five overs in his comeback match from a hamstring injury.
Warner was named man of the match for his first half-century of the series after Watson won the toss and elected to bat.
David Hussey, who appeared fortunate not to be given out on 17 for obstructing a throw for an attempted run out, chipped in with 54 to take over as the leading runscorer in the series with 338 runs.
Hussey blocked a throw by Suresh Raina with his right hand but umpires deemed he was preventing injury and he was allowed to bat on, to Indian captain Dhoni's fury.
Wade, relegated down the batting order to number six, cracked a six and two fours and featured in a 94-run partnership with David Hussey for the fifth wicket.
Watson only lasted seven balls in his comeback match before hitting straight to Umesh Yadav at mid-on for one, while Mike Hussey was run out for 10 in a dreadful mix-up with Warner.
Warner's dismissal also might have had painful consequences for India when Raina and Irfan Pathan collided as Raina kept his eyes on a skied catch at deep square leg.
Both resumed after treatment from the team physiotherapist.
Sehwag, recalled to open the innings as India ditched their controversial rotation policy in the search of a crucial win, finished the best of India's bowlers with three for 43.
Praveen Kumar (2-37) and Yadav (2-39) were the other bowlers among the wickets.