Struggling with her serve and an errant forehand in a tight first set, the fourth seed Li found her range in devastating fashion to notch six straight games on a cool, breezy night at Rod Laver Arena.
At 31, Li became the oldest woman to win the Australian Open, surpassing Margaret Court's 1973 title at the age of 30.
Cibulkova gave up two match-points when the Slovakian pushed a backhand long and saved one of them when Li did likewise, but crumbled on the second to give the Chinese her second grand slam title after winning the 2011 French Open.
Runner-up in 2011 and last year, Li raised her hands in the air in triumph and after shaking hands with her opponent, went straight to her player's box to embrace her coach Carlos Rodriguez.
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 the pint-sized 20th seed, 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 and Cibulkova held with a big serve to move 4-3 ahead.
The fourth seed Li broke Cibulkova twice and had set point on serve at 6-5 but the feisty 20th seed survived to take the opener into a tiebreaker.
The temperamental Chinese found her range in time to roar 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.
The spell broken, Li wound up a huge forehand down the line to bring up breakpoint and closed it out when Cibulkova pushed long to lead 2-0.
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 Melbourne Park final.
(Editing by John O'Brien)
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