Beth Mooney (75 runs off 50 balls) led the charge after the hosts were sent in at the SCG on Monday night, with the veteran opener making her third-highest T20I score as Australia finished at 7-198.
England needed to pull off the equal second-largest successful run chase in WT20I history to keep the Ashes alive but got off to a disastrous start, losing both openers en route to 2-4 after seven deliveries.
In at first drop, a defiant Sophia Dunkley (59 from 30 balls) hit the highest score of any England batter this series to single-handedly keep the tourists in the game.
But England were still 89 runs short of their target when stand-in captain Tahlia McGrath collected Dunkley's leg stump in the 12th over and put Australia back on the path to victory.
England were all out for 141 in the 16th over.
Sophia Dunkley gave England a faint sniff with 59 off 30 balls before falling to Tahlia McGrath. (Mark Evans/AAP PHOTOS)
Having won the three One Day Internationals, reigning Ashes champions Australia now cannot be overtaken on points aggregate ahead of the series' final two T20Is and one-off Test match.
Win or draw any of those and Australia will claim a series victory, but the availabilities of captain Healy (foot) and star allrounder Gardner (calf) are under a cloud.
Both were ruled out ahead of the toss, with Healy experiencing soreness in the same foot she injured at last year's T20 World Cup and Gardner diagnosed with a low-grade calf strain.
Having played the steady hand alongside debutant Georgia Voll (21) early on, Mooney cut loose after drinks for a 23rd T20I half-century, and ultimately her third-highest T20I score.
She rode her luck after being given lives on 16 and 23 runs, first dropped by wicketkeeper Amy Jones.
Mooney then breathed a sigh of relief as her shot high to cover was inexplicably allowed to bounce by Nat Sciver-Brunt and Charlie Dean, the pair miscommunicating just outside the circle.
Stand-in skipper Tahlia McGrath belted 26 off nine balls before being bowled by Sophie Ecclestone. (Mark Evans/AAP PHOTOS)
England tightened their act up in the field after drinks to get back in the game.
Captain Heather Knight ran out Phoebe Litchfield (25) with a direct hit from 20 metres, before Jones stumped Ellyse Perry (7) by the barest of margins.
England would've felt right in the game at 4-121 when allrounder Annabel Sutherland (3) holed out to mid-wicket, but Mooney clicked into gear, with quick Lauren Bell a favourite victim.
Mooney slapped Bell for three fours - all behind the wicket - in the space of four balls in the 16th over before Jones eventually stumped her from Freya Kemp's bowling in the 18th.
England's run chase could hardly have started worse, with Maia Bouchier picking out Georgia Wareham in the deep on the second delivery of the innings from Megan Schutt (1-35).
Kim Garth (1-30) had Bouchier's fellow opener Danni Wyatt-Hodge caught behind on the first ball she bowled to send the tourists into a tailspin.
Dunkley spearheaded England's recovery and led away fans to wonder why she had not been selected for the three-match ODI leg of the series.
She reignited the innings with three sixes from Garth in the fourth over and continued to back herself as veterans Nat Sciver-Brunt (20) and Knight (18) fell around her.
Both were dismissed by star legspinner Alana King (2-14), who continued a brilliant series in her first T20I since February 2023.
McGrath had the prized scalp of Dunkley in the 12th over, with England's remaining five wickets falling for 31 runs.
Sarah Glenn was dismissed for a rare diamond duck, having not faced a ball, as England limped to the finish.
