The hosts experienced some nervous moments as wickets fell during their chase of a 160-run target, but they reached the total after lunch on the fifth day at the Sydney Cricket Ground. Cameron Green remained unbeaten on 22, with Alex Carey on 16 at the finish, News.Az reports, citing AFP.
For England, the defeat marked the closing chapter of a difficult and disappointing series.
“That’s Ashes cricket. Everyone got tense,” Carey said after hitting the winning runs.
“Usman is going to be missed. A great career and a great way to finish.”
Australia lost openers Travis Head (29) and Jake Weatherald (34), along with captain Steve Smith (12) and Khawaja, who made six in his final knock before retirement.
"It means a lot. So much has gone into it. The only thing I wanted was a win, as much as I wanted to hit the winning runs," said Khawaja, who was almost in tears as he walked off to a standing ovation after being bowled by Josh Tongue.
"The whole Test match I found it hard to control my emotions," Khawaja added after his 88th and final appearance on the Test stage.
Marnus Labuschagne, dropped on 20, compiled 37 before needlessly running himself out to give Ben Stokes's men a flicker of hope as they reduced Australia to 121-5.
But victory was never seriously in doubt after England were dismissed for 342 on the back of Jacob Bethell's stylish 154.
"Australia are an incredible team," said Stokes, whose side were outplayed over the course of the series.
"They had individuals who stood up. Full credit to them. But we know we could have done better."
Defeat ended a long tour for the visitors that quickly turned into a horror show when they lost the opening two Tests in Perth and Brisbane by eight wickets and the third at Adelaide by 82 runs.
Stokes's side had arrived confident they could win their first series in Australia since 2010-11 amid taunts about the hosts having their worst side in 15 years.
Facing heavy criticism over their preparations, discipline and ultra-aggressive "Bazball" style of cricket, they rallied to pull off a stunning four-wicket comeback win in the fourth Test in Melbourne.
It was their first victory in 18 Tests on Australian soil and restored some pride, but another loss in Sydney, albeit close, will see them face a tough inquisition on their return home with coach Brendon McCullum's job on the line.
"Time for reflection is not right now," said Stokes.
"We've got a long time away to reflect on it. Come June when we next play, hopefully we can put the wrongs right."
Australia achieved their success despite being without pace spearhead Josh Hazlewood for the series and skipper Pat Cummins for all but one Test, while veteran spin king Nathan Lyon played a limited role.
Nearly 860,000 fans watched the series with a record 211,032 through the turnstiles in Sydney.
