Forced to bat first, Australia made a brutal start by openers David Warner and Travis Head — 70-0 in 4.5 overs — but was pulled back and posted 201-7, the highest total in a week-old tournament featuring tricky pitches.
Tasked with making the third biggest successful run chase in tournament history, England took a swipe but decayed to 165-6. Adam Zampa and Pat Cummins took two cheap wickets each.
Australia moved on top of Group B with two wins from two matches, while England remained winless with Oman and Namibia to come.
England threw offspin at left-handed openers Warner and Head without success. Head smashed Will Jacks' first two deliveries for sixes, and Warner smoked him in the same over.
Pace didn't bother the batters either. Warner hit three sixes and a boundary in one Mark Wood over.
Warner, playing England for possibly the last time, was out for 39 off 16 when he backed up to a Moeen Ali delivery that stayed low.
Head went in the next over, bowled by Jofra Archer for 34 off 18. Australia finished the powerplay 74-2.
Adil Rashid was put on the roof by captain Mitchell Marsh, and Chris Jordan went for 18 in an over.
A change to Liam Livingstone's legspin was profitable, as Marsh was stumped for 35 and three balls later Glenn Maxwell departed for 28.
Marcus Stoinis greeted Rashid with a one-handed six over backward square, and smacked Livingstone over his head.
Australia reached 200 with three balls to go, and Stoinis was out for 30 off 17 — Jordan's 100th T20 wicket — and Cummins was run out.
England's chase was measured but cruising. Phil Salt and Jos Buttler had them 54-0 after the powerplay then took 19 runs off a Mitchell Starc over.
Zampa spun the momentum back Australia's way.
His first ball bowled Salt for 37 off 23.
Buttler then hit Zampa straight to backward point after 42 off 28, including five boundaries and two sixes.
England was 92-2 in the 10th over and on track, but the middle order failed to fire as they were pinned down by the Australian battery.
Starc was expensive but his brilliant diving catch on the boundary removed Jacks.
England needed 14 runs an over with seven to go, and blasted 20 off Maxwell, including three sixes by Ali.
But Maxwell then caught Jonny Bairstow on the boundary for a 13-ball 7 and blew a kiss to the England fans who had been ribbing him.
After Ali was caught in the deep for 25 off 15, Harry Brook and Livingstone were tied down by Hazlewood, Cummins and Zampa, the man of the match.
Earlier, David Miller bailed South Africa out of deep trouble against their bogey team the Netherlands in a four-wicket win on Long Island.
Miller’s unbeaten 59 off 51 balls, with four sixes and three boundaries, rescued South Africa from 12-4 in the fifth over.
This was after the Netherlands was restricted to 103-9.
Miller and Tristan Stubbs, with 33, saved the day in making 106-6 with seven balls remaining.
The Netherlands was going for a hat trick of wins against South Africa in World Cups, after winning their T20 in 2022 and one-day international in 2023.
Chasing a paltry 104 for victory, South Africa’s big T20 hitters failed.
Quinton de Kock was run out for a duck, and fellow opener Reeza Hendricks was bowled for 3. Aiden Markram was caught behind playing down the leg side for a three-ball duck and Heinrich Klaasen holed out for 4.
Dutch medium-pacer Vivian Kingma finished his four overs with 2-12.
Miller and Stubbs put on a cautious 65 off 72 balls on a challenging pitch.
Stubbs was caught in the 17th over and Marco Jansen was dismissed for a golden duck in the next over, and the situation tensed up again.
But Miller held his nerve and the Proteas earned their second win in two games in Group D.
Earlier, pacer Ottneil Baartman grabbed 4-11 in four overs as the Netherlands was cut down to 48-6 in 11.5 overs.
Sybrand Engelbrecht scored 40 off 45 balls to anchor the Dutch, and Logan Van Beek scored 23 to push the total past 100.
The West Indies and Uganda play late Saturday in Guyana.
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