Arts Minister Simon Crean conferred the award on the cricketer at a ceremony on Tuesday in Mumbai, Tendulkar's home city, after the honor was announced by Prime Minister Julia Gillard during her visit to India last month.
Tendulkar was recognized "for his service to Australia-India relations by promoting goodwill, friendship and sportsmanship through the sport of cricket", said a statement from the Australian consulate-general.
"Mr Sachin Tendulkar, as a member and former Captain of the Indian Cricket Team, has made an outstanding contribution to international cricket for more than 20 years," it said, describing his career as an "inspiration".
The 39-year-old batsman is the world's leading scorer in both Test and one-day cricket and has compiled an unprecedented 100 international centuries.
West Indies batting star Brian Lara was also honored with membership of the Order of Australia in 2009.
Two other Indians, former attorney-general Soli Sorabjee and Mother Teresa, have previously been awarded Australian honors.
Tendulkar's popularity in the country was cemented when legendary cricketer Don Bradman said he was reminded of his own batting after watching the Indian play.
Announcing his honour in New Delhi in October, Gillard said Tendulkar deserved the "special honor" because he was a "very special cricketer".
"Cricket is of course a great bond between Australia and India. We are both cricket-mad nations," she said.
