The world No.2 was handed a passage into the title match when Novak Djokovic withdrew from their semi-final through injury, but couldn't capitalise on the opportunity to claim an elusive major crown.
Zverev was no match for Sinner on Sunday night as the top-ranked Italian won 6-3 7-6 (7-4) 6-3 at Rod Laver Arena.
"It sucks standing here next to this thing and not being able to touch it, I'll be honest," the 27-year-old German said at the trophy presentation.
"Congratulations to Jannik, you more than deserve it. You're the best player in the world by far.
"I was hoping that I could be more of a competitor today, but you're just too good. It's as simple as that."
Alexander Zverev. (Joel Carrett/AAP PHOTOS)
Zverev is now 0-3 in grand slam finals.
He let a two-set lead slip in the 2020 US Open final against Dominic Thiem before relinquishing a two-sets-to-one advantage against Carlos Alcaraz in last year's French Open decider.
"We're trying to do all the right work - I'm just not good enough. It's as simple as that," Zverev said with a smile.
"I really appreciate what everybody (in my team) has done over the last few years back from my ankle injury to world No.2 to playing grand slam finals again.
"I really appreciate everything they have done and I wouldn't be here without them."
Zverev was frustrated during the first set against Sinner when he realised the racquets he'd sent to be re-strung were not with him courtside.
He exchanged words with his coaching box about the issue and did not win another game in the first set.
Tension boiled over again after the second-set tiebreaker, when a frustrated Zverev smashed a racquet into his bench and then twice into another racquet on his bag.
The third set was headed only one way once Sinner broke Zverev's serve in the sixth game.
Zverev was consoled by Sinner after the match and at the presentation. (Joel Carrett/AAP PHOTOS)
Zverev's forehand let him down - he hit only three forehand winners alongside 24 unforced errors and 11 forced.
And he didn't have a single break-point opportunity throughout the match, which lasted two hours and 42 minutes.
"I really didn't think I had a chance, but here I am," Zverev said.
"I don't know if I'll ever be able to lift the trophy but I'll keep coming back, keep trying, and I'll see you guys all next year."
Zverev held a 4-2 career record over Sinner heading into the final, but has now lost their past two meetings.
Sinner encouraged his vanquished opponent in his trophy acceptance speech.
"You are an amazing player," the 23-year-old said to Zverev.
"Keep believing in yourself because I think all players, coaches, whoever is involved in this sport knows how strong you are - not only as a player, but also as a person.
"So, keep it up, keep working hard, because we all believe that you can lift one of these very, very soon."
