Murray blamed himself for falling for Djokovic's rope-a-dope tactics after losing his fourth final in Melbourne. Last year, his highest-ranked adversary prior to Djokovic was world number eight David Ferrer in the quarter-finals.
Serb star Djokovic won 6-3 5-7 6-4 in a high-quality, action-packed match between the two best players in the world.
Djokovic won the Qatar Open title past year and was defending 250 points so his tally remains the same; however, because Murray played in the Hopman Cup - a non-ranking exhibition event - the 150 points he won for finishing runner-up is added to his total, extending the gap to 630 points.
In contrast, Djokovic's season imploded after a third-round loss at Wimbledon, followed by a first-round exit to Juan Martin del Potro at the Rio Olympics and defeat to Stan Wawrinka in the US Open final.
'Against Novak I was actually pretty good when I started moving forward, dictated quite a few points, but not as much as I would have liked.
"I think being healthy I only played the US Open".
Seventeen-time Grand Slam great Federer, who at 17 is out of the top 10 for the first time since late 2002, is easing his way back after six months out with a knee injury, while 14-time Grand Slam victor Nadal is coming off another injury-hit season.
The world No.2 cancelled a planned hit-up on Rod Laver Arena on Wednesday, instead training on one of Melbourne Park's back courts.
In the end the 29-year-old accepted the honour to become "the youngest person in living memory and the first active tennis player to be made a knight", says Stuart Fraser of the Times, who adds that Murray's new status has brought an "element of intrigue" to the locker room. "Last year was a tough year, I just hope to change things this year and play better again".
"I do care about British tennis a lot, I would like to see it doing better".
Reigning Australian Open champion Novak Djokovic has finally landed in Melbourne, opting for a short and low-key preparation ahead of his potentially record-breaking Australian Open assault. I think it was high-level tennis. The Scot is perhaps one of the few players to not have struggled with any significant injury that has derailed his career, even for a short period.
'There's not loads that I need to work on, I feel like I'm playing good tennis, moving well.
Murray won their last encounter 6-3, 6-4 in the ATP Finals in November.