In a dramatic turnaround on Tuesday, England crumpled to 129 all out, leaving the Australians with the task of scoring 168 runs for victory off 36 overs.
Australia achieved that with ease by six wickets to seize a 2-0 lead in the five-Test series and now head to Perth, where victory in the December 14-18 third Test would win back the Ashes after they relinquished them for the first time in 16 years in 2005.
Despairing England must win two of their remaining three Tests to draw the series and, as holders, retain the Ashes.
Australia showed their intent to go after the tantalising win from the start with 10 runs off Matthew Hoggard's opening over, before Justin Langer fell in his next over, cutting to Ian Bell at backward point for seven.
Matthew Hayden scored at a run a ball but when on 18 he skied an attempted pull shot off Andrew Flintoff and Paul Collingwood took an outstanding catch running backwards, leaving the home team 33 for two but bang on the run rate.
Mike Hussey was promoted to No.4 ahead of the threatened Damien Martyn to join Ricky Ponting and the pair rattled along at five an over, putting on 83 runs in 76 minutes before Ponting fell to Ashley Giles for 49.
Martyn's Test future is in jeopardy after another cheap dismissal for five, but a sign of England's frustrations came when Michael Clarke got four overthrows from a over-cooked throw by Pietersen to give him seven runs.
Hussey guided his team to victory with a hustling 61 not out and hit the winning runs as Australia reached 168 for four off 32.5 overs, with Clarke not out 21.
The Australians set up their run chase after skittling England for a snail-paced 129 in 73 overs, just five more than their lowest-ever total at the Adelaide Oval.
First innings double-centurion Collingwood fought a rearguard to remain unbeaten on 22 as England unravelled under the brilliant leg-spin bowling of Shane Warne and poor shot-making.
Test cricket's greatest wicket-taker claimed 4-49 off 32 overs -- 4-29 off 27 overs unchanged Tuesday -- to spark the English slide, with the tourists losing their last nine wickets for 60.
Collingwood batted for 198 minutes and faced 119 balls for his stonewall innings and held out with James Anderson in a last-wicket partnership of 41 minutes and 54 balls.
After four days of just 17 wickets and 1,123 runs on a lifeless pitch, the match sprung to life with two compelling sessions as Warne ran the show, finally enjoying some assistance from the wearing wicket to take his Test career tally to 694 wickets.
England had the start to the final day they dreaded with Warne grabbing two wickets, Bell run out in a horrible mix-up and Flintoff out to a swoosh outside off-stump.
Warne, who was belted for 1-167 in the first innings, hit back in the morning with the wickets of opener Andrew Strauss and his Hampshire county team mate Pietersen.
Strauss was caught at short leg by Hussey for 34 off Warne in the 11th over of the day and was quickly followed by Bell (26) in a dreadful mix-up with Collingwood.
Warne took special delight in taking the wicket of first-innings centurion Pietersen for two.
Warne flicked a prodigious leg-break that bowled the dangerous Pietersen, attempting to sweep, around his legs.
Flintoff went after a Brett Lee delivery that moved off the pitch and edged to Adam Gilchrist for two, leaving his side at 77 for 5.
Geraint Jones (10), Ashley Giles (0), Matthew Hoggard (4) and Steve Harmison (8) fell after lunch before Anderson helped Collingwood temporarily delay Australia's victory assault.
England 551 for 6 decl and 129 (Andrew Strauss 34, Ian Bell 26, Paul Collinwood 22 n o; Warne 4 for 49, McGrath 2 for 15, Lee 2 for 35) lost to Australia 513 and 168 for 4 (Mike Hussey 61 n o, Ponting 49, Clarke 21 n o; Flintoff 2 for 44, Hoggard 1 for 29)