The Australians, rapidly approaching the peak of their powers with the finals about to start next week, plundered a record total of 344 for six against the Proteas then restricted the visitors to 287 for 6 in reply.
Adam Gilchrist [ Images ] (88), Damien Martyn (79) and Ricky Ponting [ Images ] (72) each smashed half-centuries as the world champions went on a batting rampage, registering the highest score by any country against South Africa and the second-highest total by any team in a limited-overs international at Sydney.
"When we get those sorts of totals we're always going to be hard to chase down," Ponting said at the post-match presentation.
"All our batters are looking good and the bowling and fielding has improved as well... so we're in really good shape going into the finals."
Australia's total eclipsed Pakistan's 335-6 against South Africa in 2002-03 and was just 15 runs short of Australia's record of 359-5 against India [ Images ] in Sydney two summers ago.
South Africa's total was their highest score of the tournament, which also includes Sri Lanka [ Images ], but they were still never really in the hunt to win the match.
Wicketkeeper Mark Boucher [ Images ] scored an adventurous 76 that featured two successive sixes off spinner Brad Hogg [ Images ] and Herschelle Gibbs [ Images ] carved out 46, but Australia were always in control.
With Australia already assured of their place in the best-of-three finals, the other spot will be decided by the outcome of Tuesday's clash between South Africa and Sri Lanka in Hobart.
Australia made their intentions clear from the outset after Ponting won the toss and elected to bat first in front of a crowd of 35,136.
They raced past 50 in the sixth over with Gilchrist slamming four boundaries from the third over of the innings from Johan van der Wath.
Gilchrist was at his aggressive best, pulling and driving the ball ferociously to chalk up 14 fours and give Australia a flying start.
He reached his half-century off just 29 balls and had faced just 37 more when he threw his wicket away on 88, skying a pull shot off Charl Langeveldt to Boucher.
Ponting was also in superb touch, reaching his 50 off only 37 balls, peeling off eight boundaries in 61 balls and 98 minutes before he also fell in pursuit of quick runs.
Martyn began cautiously but accelerated in the final overs after being joined by Mike Hussey [ Images ], reaching his half-century off 65 balls.
Martyn belted 11 runs of the last over but was run out off the final ball of the innings trying to scamper back for two, leaving Hussey stranded on 47 from just 33 deliveries.
South Africa, needing to break the world record for the highest successful run-chase in international one-day cricket, made a terrible start when their out-of-form skipper Graeme Smith [ Images ] was caught down the legside for six.
The remaining South African batsmen all got starts with everyone making at least 25, but the target was always out of reach.
A Gilchrist c Boucher b Langeveldt 88
S Katich c Kemp b van der Wath 11
R Ponting c Gibbs b Botha 72
A Symonds [ Images ] c Hall b Smith 7
D Martyn run out 79
M Clarke c Rudolph b Hall 27
M Hussey not out 47
Extras (lb-4 nb-1 w-8) 13
Total (for 6 wickets, 50 overs) 344
Fall of wickets: 1-65, 2-138, 3-168, 4-203, 5-263, 6-344.
Did not bat: B Hogg, B Lee, N Bracken, S Clark.
Bowling: J. van der Wath 10-0-76-1, M Zondeki 4-0-42-0, A Hall 10-0-69-1, C Langeveldt 6-0-49-1, G Smith 10-0-52-1, J Botha 10-0-52-1.
South Africa Innings
G Smith c Gilchrist b Lee 6
B Dippenaar c Hussey b Clark 27
H Gibbs c Gilchrist b Symonds 46
M Boucher c Hopes b Symonds 76
J Kemp c Bracken b Hogg 28
A Prince run out 25
J Rudolph not out 31
J van der Wath not out 37
Extras (lb-7 nb-2 w-2) 11
Total (for 6 wickets, 50 overs) 287
Fall of wickets: 1-7, 2-52, 3-105, 4-172, 5-199, 6-236.
Did not bat: A Hall, J Botha, C Langeveldt, M Zondeki
Bowling: B Lee 6-0-31-1, N Bracken 9-0-51-0, S Clark 10-0-70-1, J Hopes 5-0-35-0, A Symonds 10-0-42-2, B Hogg 10-0-51-1.
Result: Australia won by 57 runs