Geale, 31, won in a unanimous points decision after 12 rounds in Sydney.
After a lengthy recount at the end of the bout, when both boxers appeared to believe they had won, all three ringside judges voted in favour of Geale.
Judge Charlie Lucas 116-112 - Geale
Judge Tony Marretta 117-111 - Geale
Judge Ray Reed 117-111 - Geale
Geale earned revenge for his only professional loss and raised questions over Mundine's boxing future with a unanimous points win.
The fight in front of what appeared to be a full Sydney Entertainment Centre featured numerous quickfire inside exchanges between the two fast-handed fighters.
Ultimately Geale, 31, outworked 37-year old Mundine, who landed several right-hand shots during the bout, but couldn't match the champion's work rate.
It was Geale's fourth successful title defence and sets up the possibility of more unification bouts down the track.
Mundine was competitive but lacked the explosive advantage in speed that enabled him to beat opponents in his prime and it remains to be seen whether he can, or wants, to stay in a game he has graced for close to 13 years.
The packed crowd provided a stirring vocal backdrop as the two highly skilled fighters each strove to gain an advantage.
Geale was the first to land some shots, though Mundine did briefly back him up against the ropes and caught the champion with a good right to the head in the closing seconds of a cagey opening round.
Both men looked to assert themselves through the jab, but neither landed many scoring power punches in the second round.
American Robert Byrd, who was officiating in his 115th world title bout, twice cautioned Mundine for use of his head during the third round, in which Geale did well early and the challenger lifted near the end.
The fourth featured some exciting inside exchanges with both men scoring, though Geale had a slight edge in work rate.
Geale probably shaded the fifth and sixth rounds with greater punch volume, but Mundine still caught the champion occasionally with a right hand, without landing follow-up blows.
In round seven, Byrd warned Geale for punching to the back of the head.
Mundine got his supporters chanting his name with a good flurry in the eighth, which drew only a smile from the champion.
Geale started the ninth in strong fashion, but Mundine came on strong in the last minute.
The champion pressed the pace in the tenth and maintained his edge through to the end.
The fighters didn't step into the ring until after 11.10pm (AEDT), following a six-fight undercard, which produced just one inside the distance result.
The suggestion Mundine would snub the national anthem was averted, as it was performed before both men entered the ring.
As per usual for a big boxing bout, there was a stellar cast of sporting stars, administrators and politicians in attendance.
NSW Premier Barry O'Farrell, footballer-boxers Sonny Bill Williams and Quade Cooper, rugby league stars Todd Carney and Nathan Hindmarsh and FFA boss David Gallop were among the many notable figures.