Substitute Cormac Blake's converted try four minutes from time gave the home side hope of claiming a famous draw, despite playing in their own half for large parts of the game.
Munster put in an excellent defensive display against a very physical Australian side and perhaps should have claimed the draw when they were given a kickable penalty in front of the posts two minutes from time. They instead opted for the corner but the kick went beyond the dead ball line.
The victors opened up an early eight-point lead after a Mitchell Third penalty and an Adrian Henley try. Tomas Quinlan responded with a penalty but it was Australia who led 8-3 at half time.
Quinlan and Third exchanged early second half penalties before Australia extended their lead through a well-worked Harry Jones try that put his side into a 16-6 lead.
But with the game nearing an end, Munster showed tremendous character to fight back and deservedly crossed for a try when Blake was forced over from a powerful rolling maul. Quinlan added the extras but it wasn't enough as Australia ran out three point winners.
Afterwards, Munster U19s coach Keith Murphy spoke of his delight with how his side acquitted themselves.
"We might have snuck it at the end. We're well proud of what the boys did tonight and in particular they can be proud of themselves because they gave a very good account of themselves against a strong, physical Australian side.
"We've found that these players back themselves a lot and we're very proud of that. This has been a very good experience for our guys. These kinds of games are a must for our development.
"A lot of these players have fierce potential. The future bodes well for Munster Rugby," he added.
Munster U19: S Fitzgerald; G O'Shea (P Kiernan 32), S McMahon capt, JJ O'Neill (G Lyons 51), B Murphy; T Quinlan, D O'Mahony (J Poland 40), L O'Connor, J Boland (L O'Halloran 36), M O'Donnell (J O'Halloran 56); F Bradshaw Ryan, J Keane (A Hogan 49); B Kilkenny, L O'Leary (T Ademakin 53), M Murphy (C Blake 51).
Australia Schools: A Henley (H Hutchinson, 25); H Jones, A Kellaway capt (T Milne 42), K Morgan, J Todd; M Third (A Deegan 56), M Short; F Sa'aga, A Mafi (E Guttenbeil 53), M Gibbon (V Fifita 33); L Cannell, M Jones (J Anderson 33); D Morris (L Faka'osilea 49), T Tai (J McCalman 40), R Warren Vosayco.
Referee: G Conway (IRFU).