In a captivating tussle played out in stifling humidity, the Dane hung tough in a nerve-shredding final set to win 7-6(2) 3-6 6-4 under the lights at a heaving Rod Laver Arena.
She swiped Halep's world number one ranking in the process, six years after losing it at the 2012 tournament at Melbourne Park, the restoration having taken a record amount of time.
"I have to take a second to hug Daphne... it's a dream come true, and my voice is shaking, it's a very emotional moment," a teary-eyed Wozniacki said, cradling the Daphne Akhurst Memorial Cup at the presentation ceremony.
"I want to congratulate Simona. I know today is a tough day and I'm sorry I had to win."
After closing it out when Halep netted a backhand, the overwhelmed Dane threw her racket away and collapsed onto the blue hardcourt as the packed terraces roared.
Following runner-up finishes at the 2009 and 2014 U.S. Opens, it was third time lucky for the 27-year-old who saved match points in her second round match against Jana Fett.
Making the breakthrough in her 43rd grand slam appearance -- only three players have needed more -- Wozniacki will no longer be known as one of the game's best without a major success.
"Honestly, I think that's one of the most positive things about all of this," the second seed told reporters.
"I'm never going to get that question again. I'm just waiting for the question, 'when are you going to win the second one?"
Top seed Halep was gallant in defeat and at the end of an exhausting campaign, she came back from a break down in the final set to push within two games of victory.
But Wozniacki took full advantage of the fatiguing Romanian, claiming the last three games after some furious all-court play.
"I was close again, but the gas was over in the end," said twice French Open runner-up Halep, all class after her third grand slam final disappointment.
"I'm still losing and I'm still waiting," she added with a wry smile. "Maybe the fourth one will be with luck."
On a steamy evening, Wozniacki's edge in power told early as she roared to a 3-0 lead in the opening set before Halep could find her range.
She wobbled when serving for the set at 5-3 when a hollering fan broke her focus.
But she was commanding in the tiebreak, closing it out swiftly with a blazing shot that all but knocked the racket out of Halep's hand.
The world number one was on the back foot and suddenly dizzy, and she called a medical timeout to have her blood pressure taken after holding serve to 3-2 in the second set.
She then began grabbing at her left thigh after points, but somehow found the energy to break Wozniacki with a swashbuckling forehand down the line.
Nothing would come easy for Halep, who saved further break points in a nervous service game before claiming the set with a risky dropshot that Wozniacki failed to deal with.
Romanians in the terraces went ballistic at the breakthrough, but were silenced as Wozniacki feasted on her opponent's weakening second serve, a fiery return pushing her 2-0 ahead in the decider.
The grind of a long fortnight came to the fore as both players threw away serve, but Halep nudged 4-3 in front when Wozniacki's forehand deserted her.
It all looked grim for the Dane as a trainer strapped her leg at the change of ends, but she broke back before holding serve for the first time in three attempts.
Sensing her moment as Halep served for survival, Wozniacki fired a searing forehand winner to edge a 16-shot rally for match point and then held on grimly until the Romanian finally buckled.
(Editing by Pritha Sarkar)
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