The 21-year-old singer from Hartlepool, who also won All Together Now in 2014, was crowned the victor of Eurovision: You Decide and will be singing the track Bigger Than Us at the annual TV song competition.
She said she experienced a bout of nerves before she performed the winning song dressed in a towering metres-long silver dress and headpiece.
Miller-Heidke won the nationally televised competition to represent Australia at this year's Eurovision Song Contest, which will be held in May in Tel Aviv. "Thanks to everyone who voted, and to all the other artists who provided such a brilliant, eclectic and stiff competition", she said.
Australia has chosen - our Eurovision 2019 representative is... Sheppard took the third place with On My Way on 87 points.
Co-written with her husband Keir Nuttall, Kate Miller-Heidke's song Zero Gravity explores the singer's experience with post-natal depression, which she suffered after the birth of her son, Ernie, in 2016. That tally - which was amassed during Australia's first ever public vote on potential Eurovision contenders - combined with a score of 48 from an entertainment industry jury to land her the historic win.
Despite being a European contest, Australia has been competing in Eurovision since 2015.
"Kate's performance tonight was quite simply breathtaking and the response from the Australian public has been overwhelming", he said.
Paul Clarke, the creative director of Eurovision - Australia Decides, describedMiller-Heidke's victory as "a win for out-of-the-box brilliance, which Eurovision devours".
Kate is perhaps best known for her 2008 song "Caught In The Crowd" and was one of the more well-known faces taking part in the decider this year. Israeli pop star Netta Barzilai won Eurovision in 2018 with a quirky #MeToo-inspired entry, Toy.
But activists for the Palestinian-led worldwide Boycott, Divestment and Sanctions (BDS) movement have been calling on musicians and broadcasters to refuse to participate in this year's song contest as part of a broader campaign against Israel's occupation of Palestine. The previous candidates were Guy Sebastian, Dami Im, Isaiah Firebrace and Jessica Mauboy.