The vote was widely seen as a test of Mr Morrison’s authority, with Mr Molan unpopular among the party’s Moderate and Right factions after running a “below-the-line” campaign at the election.
However, the Right did formally endorse Mr Molan after an intervention from Mr Morrison and other Liberal heavyweights, including former prime minister John Howard.
Mr Molan received 277 first preference votes to Mr Shields’ 153 while 81 votes were cast for St Vincent’s Hospital heart surgeon Michael Feneley.
Former Liberal MP Peter Hendy, who went on to be a senior adviser for Malcolm Turnbull and secured the backing of former foreign minister Alexander Downer, received five votes.
Mr Molan has previously spend decades in the Australian Defence Force, including as chief-of-operations during its 2003 deployment in Iraq.