The Australians settled for silver after leading 12-5 late in the decider in Dakar, Senegal.
The Kenyans crossed for a try in the final seconds to level scores and force the decider into extra time.
And the East Africans scored next in a golden point scenario to clinch the decider, leaving the Australians with mixed emotions.
"The girls are really supportive," said Australia's opening tryscorer Darci Turinui, the daughter of Wallabies great Morgan Turinui.
"Obviously it's not the result we wanted.
"But the fact that we could get together at the end to give each other a hug and what we needed to support each other was amazing."
Turinui crossed for the first try just 36 seconds into the match at Complexe Iba Mar Diop and scores were level at halftime, five-all.
Queenslander Grace Buchanan's try in the second half put the Australians on track for gold, until the late Kenyan replies.
Australia captain Aimee Henry said the team's silver medal was an accomplishment worth celebrating.
"We came here for the gold, but silver tastes just as good," she said.
"I'm really proud of the girls ... but at the end of the day Kenya just put in a great performance and I can't take that away from them."
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