The tourists, chasing an unlikely 399 to win in a shade under two days, clung on late into the evening session on the fourth day before finally collapsing as the shadows lengthened in south London.
Australia, 2-1 up going into the match, were bidding to win their first Ashes series in England since 2001 but were denied by the fired-up hosts, with paceman Jofra Archer named man of the match for his six first-innings wickets.
"A very good performance," said England captain Joe Root. "I thought we were brilliant. To bounce back from a very difficult emotional week, to come and play in the manner we have, the team has character in abundance.
"This was more of a template of how to play moving forward. It is a step in the right direction. I am very proud of everyone's effort throughout the summer."
Stuart Broad struck early to remove openers Marcus Harris and David Warner but while former captain Steve Smith was at the crease, Australia retained a faint hope of victory.
But when Ben Stokes dived to his left at leg slip to catch Smith for 23, giving Broad his third wicket of the innings, England knew they had removed the biggest obstacle in their victory charge.
Smith, who scored an astonishing 774 runs in just seven innings, was out for a score of less than fifty for the first time in the series.
The Oval crowd gave him a standing ovation as he walked back to the dressing room in the September sunshine, with Australia in deep trouble at 85-4 in the post-lunch session.
Matthew Wade offered brave resistance, scoring 117 as Archer cranked his speed up to 95 miles-per-hour in the evening sunlight, eye-balling the Australian batsman in an attempt to intimidate him.
Occasional bowler Root finally got his man, luring him forward as Jonny Bairstow whipped off the bails.
Left-arm spinner Jack Leach removed Nathan Lyon and Josh Hazlewood in successive balls, meaning England salvaged pride two months after winning the one-day World Cup for the first time.
Broad and Leach both finished with four wickets.
Earlier, England added 16 runs to their overnight tally, with Archer and Leach the last men out.
Broad then pounded in, roared on by a packed crowd, reducing Australia to 29-2.
Warner, who returned to international cricket in June after a 12-month ban for ball-tampering, scored just 95 runs in 10 innings and was dismissed by Broad seven times.
Smith was named Australia's man of the series while Stokes won the award for England.
"It meant a lot to have that reception from the crowd today," said Smith.
"It's been an amazing couple of months with the World Cup and the Ashes, the cricket has been spectacular.
"The series has ebbed and flowed. I've loved every minute and I'm really proud of how I've been able to perform for Australia and to bring the urn home."
Scoreboard England 1st innings 294 (J. Buttler 70, J. Root 57; M. Marsh 5-46, P. Cummins 3-84)
Australia 1st innings 225 (S. Smith 80, M. Labuschagne 48; J. Archer 6-62, S. Curran 3-46)
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England 2nd innings (overnight 313-8)
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R. Burns c Paine b Lyon 20
J. Denly c Smith b Siddle 94
J. Root c Smith b Lyon 21
B. Stokes b Lyon 67
J. Bairstow c Smith b Marsh 14
J. Buttler c Labuschagne b Siddle 47
S. Curran c Paine b Cummins 17
C. Woakes c Smith b Marsh 6
J. Archer c Paine b Cummins 3
J. Leach c Hazlewood b Lyon 9
S. Broad not out 12
Extras: (nb1, b7, lb11) 19
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Total: (all out, 95.3 overs) 329
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Fall of wickets: 1-54 (Burns), 2-87 (Root), 3-214 (Stokes), 4-222 (Denly), 5-249 (Bairstow), 6-279 (Curran), 7-305 (Woakes), 8-305 (Buttler), 9-317 (Archer), 10-329 (Leach)
Bowling: Cummins 21-5-67-2, Hazlewood 19-5-57-0 (1nb), Lyon 24.3-5-69-4, Siddle 13-4-52-2, Marsh 11-1-40-2, Labuschagne 7-1-26-0.
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Australia 2nd innings
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M. Harris b Broad 9
D. Warner c Burns b Broad 11
M. Labuschagne st Bairstow b Leach 14
S. Smith c Stokes b Broad 23
M. Wade st Bairstow b Root 117
M. Marsh c Buttler b Root 24
T. Paine lbw b Leach 21
P. Cummins c Bairstow b Broad 9
P. Siddle not out 13
N. Lyon c Root b Leach 1
J. Hazlewood c Root b Leach 0
Extras: (nb2, b2, lb12, pen 5) 21
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Total: (all out, 77 overs) 263
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Fall of wickets: 1-18 (Harris), 2-29 (Warner), 3-56 (Labuschagne), 4-85 (Smith), 5-148 (Marsh), 6-200 (Paine), 7-244 (Cummins), 8-260 (Wade), 9-263 (Lyon), 10-263 (Hazlewood)
Bowling: Broad 15-1-62-4, Archer 16-2-66-0 (1nb), Curran 8-3-22-0, Leach 22-8-49-4, Woakes 7-1-19-0 (1nb), Root 9-1-26-2
Match result: England won by 135 runs
Series result: England 2 Australia 2
Man of the match: Jofra Archer
Man of the series (England): Ben Stokes
Man of the series (Australia): Steve Smith
Toss: Australia
Umpires: Marais Erasmus (RSA), Kumar Dharmasena (SRI)
TV umpire: Ruchira Palliyaguruge (SRI)
Match referee: Javagal Srinath (IND)
Previous Results:
First Test, Edgbaston: Australia won by 251 runs
Second Test, Lord's: Drawn
Third Test, Headingley: England won by one wicket Fourth Test, Old Trafford: Australia won by 185 runs.