Argentina was heavily favored, having scored 16 goals in its first five games and beaten Uruguay (4-0) and Mexico (3-0) in the knockout phase, but Brazil stunned the crowd in Maracaibo, Venezuela, scoring after only four minutes when Julio Baptista raced down the left side and unleashed a powerful shot into the top right hand corner after being fed by Elano.
Brazil frustrated the flowing Argentine attack in midfield and kept the nervous Argentine defense on edge with its counterattacks.
The second Brazil goal came five minutes before halftime when sub Daniel Alves sent an inswinging cross into the area, and defender Roberto Ayala knocked the ball into his own net.
The third Brazil goal, also on the counterattack, was thing of beauty as Vagner Love perfectly led Daniel Alves, who broke in from the right side and scored on a shot that gave goalie Roberto Abbondanzieri no chance.
The victory was vindication for Coach Dunga, who had come under heavy criticism for his team's defensive posture. He credited his players for persevering.
"They are winners, they come from families who financially are not so well off," he said. "Nobody has given them anything, they've worked hard for this and so they deserve it."
"Lots of people criticized our team, but we're the champions," said Brazil forward Robinho, the tournament's top scorer with six goals and its MVP.
The defeat was a crushing blow for Argentina and the attacking game Coach Coco Basile had emphasized throughout the tournament.
Stars Juan Roman Riquelme and Lionel Messi were shut down by the physical Brazilian defenders. Argentina's best chance came when Riquelme hit the post in the ninth minute.
"We're totally ruined," Argentina midfielder Esteban Cambiasso said. "Losing like this hurts your soul."
July 15 in Maracaibo
Brazil 3 Argentina 0. Goals: Julio Baptista 4, own goal 40, Daniel Alves 69.
Brazil -- Doni, Maicon, Alex Rodrigo, Juan, Gilberto, Elano (Daniel Alves, 34), Mineiro, Josue, Julio Baptista, Vagner Love (Fernando, 90), Robinho (Diego, 90+1)
Argentina -- Abbondanzieri, Zanetti, Ayala, G.Milito, Heinze, Mascherano, Veron (Gonzalez, 67), Cambiasso (Aimar, 59), Riquelme, Messi, Tevez.
Referee: Carlos Amarilla (Paraguay).
July 14 in Caracas
Mexico 3 Uruguay 1. Goals: Blanco pen. 38, Bravo 68, Guardado 76; Abreu 22.
Mexico -- Ochoa, J.A. Castro, F.Rodriguez, Magallon, Pinto (Guardado, 64), Torrado, Morales, Lozano (Correa, 78), Blanco, Castillo, Bravo (Landin, 88).
Uruguay -- Carini, Scotti, Lugano, Valdez, Pereira, Garcia (Gargano, 79), C.Rodriguez, Fucile. I.Gonzalez (Canobbio, 74), Forlan (V.Sanchez, 74), Abreu.
Red card: Uruguay -- Lugano 36.
Referee: Mauricio Reinoso (Ecuador).