Gautam Gambhir, coming in at the expense of a rested Sachin Tendulkar, top scores with 92 runs in four wicket win.
Captain Dhoni takes India home past Australia with last over heroics
Australia made 269 for eight after winning the toss and electing to bat, but India replied with their best ever run chase at the Adelaide Oval to win with two balls to spare.
The Indians looked beaten when they needed 13 off the last over and managed just a single from the first two deliveries from paceman Clint McKay, who had been the best of the Australian bowlers.
Dhoni turned down the opportunity of a second run from the second ball of the over, wanting to be on strike.
He lived up to his confidence when he hit a massive six down the ground from the next ball, but was caught on the mid-wicket boundary on the next ball. It was called a no-ball, though, for being a full toss above waist high, the Indian batsmen running two and collecting a third run for the sundry.
With three balls still remaining, Dhoni flicked the next ball into the leg side for the winning three runs to cap a remarkable comeback and their best performance of a generally disastrous tour.
Dhoni, also the hero with the bat in last year's World Cup final win, had barely taken a risk until the last over as he tried to be the anchor for the late run chase, and finished with 44 not out from 58 balls.
Australian captain Michael Clarke was not surprised Dhoni made his side pay for what he believed was a disappointing effort with bat and ball.
"Dhoni is a very good one-day player," he said. "We were 10-20 runs short and the fielding was sloppy."
While Dhoni got India home, opener and man of the match Gautam Gambhir, recalled at the expense of champion Sachin Tendulkar, laid the foundation with 92 from 111 balls.
He was unlucky to miss a century as he looked unfortunate to be adjudged leg before wicket to McKay.
Tendulkar was rested under India's rotation policy, denying the 38-year-old another chance to score his long-awaited 100th international century.
Gambhir said the Indians always believed in their skipper in tight finishes.
"Cometh the hour, the most important shot of the match was played by him," Gambhir said.
"He has done a fantastic job, he has always been a fantastic finisher, that is his game plan."
Australia was left rueing a host of missed run out opportunities during an unusually sloppy fielding performance.
The missed run outs included a regulation chance to remove Dhoni in the 48th over squandered by Clarke, who appeared to be hampered by a right hamstring injury in the last 10 overs of the Indian innings.
Clarke left the field for the 43rd over and regularly clutched at his hamstring when he returned, placing him in doubt for the upcoming matches.
In the Australian innings, there were half-centuries for David Hussey (72) and debutant Peter Forrest (66).
Young Umesh Yadav was the best of the Indian bowlers, picking up two wickets at a cost of 49 runs from his 10 overs.