The world number 219 became his country's first player to win a men's singles main draw match at a Grand Slam in the professional era and soaked up wild cheers from a rowdy crowd packing the small terraces on Melbourne Park's Court 13.
With fans chanting his name, the Texas-born player raised his racket at the crowd and held up a Lebanese flag after claiming the decisive tiebreak.
Habib's success has come at a tense time for Lebanon, with a November 26th ceasefire between Israel and Lebanese militant group Hezbollah holding after nearly 14 months of war.
Habib moved back to Lebanon with his family at the age of six before returning to the US to develop his game as a junior.
He represented Lebanon at the Paris Olympics and became the country's first player to win an event on the second-tier ATP Challenger Tour in Chile last year.