The Netherlands beat the now deposed world champions Spain 5-1 in their opening match, but Louis van Gaal's men had to come from 2-1 down to end Australia's interest in the competition. Arjen Robben put the Dutch ahead but, within 60 seconds, Cahill scored the goal which will surely be a competitor for goal of the tournament.
Cahill then showed his bad side with a late challenge on Bruno Martins Indi, who was taken off on a stretcher, thus earning a booking which will put him out of the final group game with Spain.
Robin van Persie - also booked to earn a suspension which rules him out of the contest with Chile - swiftly cancelled out Mile Jedinak's penalty before substitute Memphis Depay put the Dutch ahead with 20 minutes remaining.
"I'm not relieved, because I believe in the second half we played better than Australia," said van Gaal, the Netherlands coach.
"In the first half they played better, but in the second half we had five, six, seven chances. I expected us to win. When [Australia's Mathew Leckie] missed that chance, I said to Patrick Kluivert, 'We're going to win this match'."
Depay's swerving 30-yard strike, which deceived Australia goalkeeper Maty Ryan, came seconds after Leckie's missed opportunity and settled an end-to-end contest which came alive when Robben ran at the Australia defence to put the Netherlands in front.
It was a sublime strike which was almost immediately surpassed in quality by a goal reminiscent of memorable World Cup strikes from Dutchmen Marco van Basten and van Persie.
The former Hearts defender Ryan McGowan drilled a cross-field pass over the Dutch defence and Tim Cahill's exquisite left-footed volley thundered in off the bar.
Nigel De Jong had a shot blocked as the Netherlands tried to find a fourth in a compelling contest.
Australia had opportunities, too, but could not find a leveller as their hopes of reaching the knockout stages ended.
Ange Postecoglou, the Australia coach, lauded his players' performance, which he believes deserved more than defeat.
"I put pressure on the players and the staff to go and get at the big teams. Saying it and doing it are two different things," he said.
"But they did that and they didn't get a reward. It's heartbreaking. Everyone was outstanding. For the majority of the game, we looked more likely to win the game than not."