The ink-on-paper hanging scroll called Landscape sold for a hammer price of Aus$2.6m (£1.5m) at the sale in Sydney on October 25.
Bonhams said the price for the scroll, which had been estimated at only Aus$5000-8000, makes it the most expensive Asian artwork sold in Australia.
It was part of a 40-strong collection of Chinese paintings amassed by a Sydney and Singapore-based family during the 1960s from artists and dealers across Hong Kong and London.
The scroll had remained in Singapore and had not been seen in public for nearly 50 years. The owner died earlier this year and the collection was offered at Bonhams’ Asian Art sale.
Bonhams described Baoshi as a “one of the most renowned Chinese landscape painters of his generation, and his work is eagerly sought after”.
Colin Sheaf, Bonhams global head of Asian art, described the price as a “fantastic result”. The Sydney auction made a hammer total of Aus$4m (£2.35m).