Adam Scott, who found himself eight shots off the lead to start the final round, shot a 5-under 67 to finish one shot back at 19-under-par 269.
The same venue that saw Els flirt with 59 and establish a new 36-hole scoring record earlier in the week finally showed its teeth on Sunday.
'Conditions were tough,' said Els, who won for the 16th time on the European Tour. 'Right now, I'm just happy it is over.'
Els began his round on the Composite Course at Royal Melbourne in complete control at 22 under par but a treacherous front nine was all it took to bring his competitors back into the tournament.
Els stumbled out of the gate with a bogey at the opening hole but recovered with a birdie at the par-5 second.
At the par-3 third, Els found thick grass off the tee en route to another bogey. Trouble then met up with the South African in a major way on the following hole.
Els played his approach into a bunker at the par-4 fourth and sent his third from the sand through the green. Now chipping from the other side of the putting surface, Els left his fourth shot short and watched as the ball rolled back to his feet.
He then played his fifth inside 18 feet and two-putted for a triple bogey to fall back to 18 under.
Over the course of four holes, what had once been an insurmountable advantage for Els had been cut in half.
On the other end of the spectrum, Scott dropped his second shot inside 12 feet at the par-4 fifth and drained the putt to pull within three of the lead.
Els found trouble again with a bogey at the seventh and tossed his second into the thick grass at the par-5 ninth. He scrambled to a bogey while Scott got up and down for a birdie to grab a share of the lead.
'It was a bad break after another,' said Els. 'It was kind of laughable there at nine.'
Els countered with a birdie at the 10th but Scott matched him with a birdie of his own.
The young Australian had caught the 3rd-ranked player in the world momentarily, but Els was not ready to hand the tournament over.
'He saw I was playing quite solid and could keep going with him,' Scott said of Els. 'I think it made him get back into the groove on the back nine.'
Els landed his approach inside eight feet for a birdie at the 12th and ran home a six-foot putt for a birdie at the 13th.
At the par-4 14th, Els knocked his second shot within a foot of the hole for his third consecutive birdie to move to 20 under.
Scott tried to keep pace with a birdie at the 14th and got within one of Els with a birdie at the 17th.
In the end, however, the brilliant play that Els displayed over the first three rounds proved enough to secure the win for the Big Easy.
'On the back nine when it really counted, I put my head down and I played,' said Els. 'It was almost easier in some ways having a fair battle on the back nine with Adam. It is definitely not the way I planned it but that's the way it turned out.'
Australia's Peter Fowler posted a 2-under 70 to finish alone in third place at 15-under-par 273. Peter Hanson of Sweden was one shot further back at 14-under-par 274.
Michael Campbell, who is a two-time winner of this event, carded a 70 to finish seven shots off the lead at 13-under-par 275. The New Zealander was joined by Scotland's Stephen Gallacher in a tie for fifth.
Gareth Paddison, who played in the last group along with Els and Scott, joined Mahal Pearce, Greg Owen and Paul Sheehan in a tie for seventh at 12-under-par 276.