The 36-year-old was crowned in Melbourne and was in tears as he lifted the trophy on Rod Laver Arena.
“The fairy tale continues for us, for me. After the great year I had last year, it’s incredible,” he said fighting back tears.
The Swiss lost five games in a row as he dropped the fourth set but recovered to win 6-2 6-7 (5-7) 6-3 3-6 6-1.
Federer now owns a 9-1 record against Cilic, including a victory in last year’s Wimbledon final.