The Socceroos got off to a terrible start when centre back Bailey Wright gave away possession with the second pass of the game, allowing Diego Souza to hammer home a low shot to groans from most of the 49,000 fans at the Melbourne Cricket Ground.
Souza wrapped up the win for a second-string Brazil side with a header in added time after Thiago Silva headed the second from a goalmouth scramble in the 62nd minute and substitute Taison finished off a brilliant team goal in the 75th.
Australia, who play world champions Germany in Group B at the Confedations Cup in Russia on Monday, entered the stadium with cautious optimism after last week's win over Saudi Arabia reignited hopes of a fourth straight World Cup appearance.
But the crushing early blow of Souza's early goal in Tuesday's game left Ange Postecoglou's side rattled and they were only spared further punishment in the first half by Brazil's failure to convert several early chances.
Postecoglou will wake up to some stinging headlines but he was philosophical in defeat, and said responsibility for the second half blow-out lay with him making a raft of changes.
Heavy defeat
"You never like getting defeated and you don't like a heavy defeat particularly at home," he told reporters.
"From our perspective it's about preparing for that game in about a week's time.
"We did need to get some game-time in the players, that was important tonight."
But they were in a determined mood against Australia who must go back to the drawing board before leaving for Russia.
"We kept a good defence .. I was happy because the players were supporting each other," Tite said.
The Socceroos will also face African champions Cameroon and South American title holders Chile in their section at the Confederations Cup, which is a warm-up event for the World Cup in Russia next year involving the continental champions.