Webb, 39, shot a 4-under-par 68 in the final round in coming from five strokes back after the third round. She finished the tournament at 12-under 276. It was the fifth time she won the Women's Australian Open, with earlier titles coming in 2000, '02, '07 and '08.
She is the 11th player with 40 wins on the LPGA Tour, one behind No. 10 Babe Zaharias. Kathy Whitworth, with 88 LPGA championships, owns the overall record. Counting all tours, Webb has 56 titles in a professional career that began in 1994.
Windy conditions made play challenging Sunday in Victoria. Only five players broke 70 and none were better than Webb's 68. Suzann Pettersen, No. 2 in the world and among the leaders through the first three rounds, wound up with an 8-over 80, leaving her tied for 28th.
Third-round co-leader Chella Choi, who had her drive on the second hole go out of bounds, finished with a 2-over 74, 12 strokes more than her 62 from Saturday. She finished alone in second at 11-under.
Minjee Lee was tied with Choi for the third-round lead but an early string of bogeys removed her from the title mix. She was 6-over Sunday.
Choi opened play with a birdie but, after the errant drive, had a double bogey on No. 2 and bogeyed the third hole. She then had 15 pars for a 74.
Webb birdied the first two holes Sunday and moved into the lead with a birdie at No. 11 that put her at 3-under for the day. She fell back with a bogey at 16 but a birdie at 18 moved her to 12-under and she wouldn't be caught.