After settling 12th in the early stages, Fawkner moved into the race as the field approached the home turn.
Jockey Nick Hall then eased his mount to the outside in the straight and Fawkner overwhelmed the leaders to score a decisive win.
Import Dandino closed hard from the back to finish second with Dear Demi hugging the rail to take the minor placing.
Hall is the son of former top jockey Greg Hall.
Hall senior won almost 50 Group One races but he never tasted success in the Caulfield Cup.
"I've got one up on the old man so it was an important one," his son said.
Williams' son Nick said a plan to win the Caulfield Cup was hatched almost 12 months ago when a sale fell through at the 11th hour.
"Dad said `I'm glad the bloke did pay up ... we're going to win the Caulfield Cup with this horse'," Nick Williams said.
Fawkner is by Reset, a son of Zabeel raced by the Williams family who retired to stud with an unbeaten record from five starts.
A six-year-old, Fawkner started $11, with Dandino also an $11 chance while Dear Demi was sent out at $26.
Jet Away finished fourth after being asked to make a long run when he was set alight by Damien Oliver in the middle stages.