The world No.8 Wallabies entered Saturday night's Nations Championship clash having lost nine of their past 10 Test matches, including six on the trot.
But from the very outset Australia's determination was clear to see, with the home side running in six tries to one in a dominant first half to open up a match-winning 38-5 lead by the break in front of 19,268 fans.
Canham cashed in with three tries for the match, while prop Angus Bell, hooker Brandon Paenga-Amosa, centre Len Ikitau, fullback Tom Wright, reserve hooker Billy Pollard and Ben Donaldson also scored in Saturday night's romp.
Home-town hero Carlo Tizzano was a menace at the breakdown, while recalled winger Harry Potter produced a series of dazzling runs but was unable to find his supporting teammates with an offload.
The champagne rugby marked the perfect end to Schmidt's tenure, and ensured he walked off into the sunset with a winning clip of 38.7 per cent (12 wins, 19 losses).
It means he avoids owning the worst winning percentage of a Wallabies coach in the professional era, with that inglorious record still held by Dave Rennie (38.2 per cent).
It was Australia's highest score in his three-year tenure and their largest on home soil since 2014.
"Just delighted to finish well," Schmidt said.
"I'm happy, but I'm never satisfied.There's always going to be regrets, but I am delighted that, for the sixth time in a row, we've had a full house (in Australian games).
"The people are coming back, we have to confirm (to them) it's worth it.
In a fiery end to the game, Italy prop Marco Riccioni was red-carded in the 66th minute for his involvement in a sideline melee.
Riccioni had already been subbed out of the game when he ran in to join brawling players right near the Italian bench.
The impressive win helped erase the pain of last week's 42-26 loss to France, when Australia conceded 30 consecutive points in a woeful second half.
The Wallabies exploded with three tries inside the opening 19 minutes against Italy, with Wright's turbo-speed effort through a gap the most memorable moment of the early onslaught.
The Wallabies spoke during the week of the importance of coming out from the halftime break breathing fire.
Instead, it was Italy who scored just 42 seconds after the restart courtesy of Australian-born winger Monty Ioane.
Normal order was restored in the 52nd minute when Canham completed his hat-trick with a pick-and-go, and reserve playmaker Donaldson added the icing on the cake with a try on the final siren.
"We were clinical, we had a lot of positive moments in a row and our discipline's improved," captain Harry Wilson said.
"(After Italy scored to begin the second half) we just said, 'This isn't happening again'.
"We've had two weeks of pain, the boys said, 'that's enough' and went out and dominated after that."
Italy moved to 0-3 in the tournament, captain Michele Lamaro filthy with his side's effort.
"Gutted. Very disappointed with the result and performance we put in and nothing more, honestly,'' he said.
"You have to face yourself, look in the mirror and really think about your stuff."
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