Wawrinka, 28 and seeded eighth, came away with a 6-3, 6-2, 3-6, 6-3 decision over Nadal in winning his first major tournament title in his 36th Grand Slam event.
Nadal was hampered by a back injury from the second set on, but Wawrinka was already ahead a set and break when the injury occurred.
Wawrinka took out the game's best en route to the title, eliminating three-time defending champion Novak Djokovic in five sets in the quarterfinals and beating Nadal, against whom he was 0-12 in his career, in the finals. He also was very solid in a four-set win over world No. 7 Tomas Berdych in the semifinals.
Wawrinka hadn't so much as taken a set from Nadal in his career until a break in the match's fourth game gave him a chance to win the first set Sunday. Wawrinka opened the second set with a break at love and Nadal had the back problem in the third game. Another Wawrinka break put the Swiss player up 4-1, allowing him to finish the set and reach the verge of the title.
Nadal, however, battled to a third-set win, getting his first break of the match in the second game and Wawrinka was unable to cash in any of his four break opportunities as the match momentarily tightened.
Wawrinka earned his fourth break of the match for a 4-2 lead in the fourth set only to have Nadal break back at love. But Wawrinka answered with another break, winning the last three points, and then served a love game to win the title.
Wawrinka hadn't reached a Grand Slam semifinal before last year's U.S. Open and his best previous finish in Melbourne was the quarterfinals in 2011. The Australian Open championship is his sixth title overall with half of those coming since last May. He will jump to No. 3 in the world rankings Monday, bettering his previous career high of No. 8.
He is only the second player, other than Nadal, Roger Federer, Djokovic or Andy Murray to win a major tournament since the 2005 Australian Open. In that span Nadal and Federer each took 13 titles while Djokovic won six times and Murray twice. The other interloper was Juan Martin del Potro, who won the 2009 U.S. Open.
Nadal is 13-6 in major tournament finals, including 1-2 in Melbourne. A win Sunday would have tied him with Pete Sampras for second-most Grand Slam title. Federer, with 17, owns the record. Nadal is 61-25 in ATP finals over his career.
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