After a resilient display in Monday's opening final-day session from Joe Root (66) and Moeen Ali (39), the hosts lost six wickets for 50 runs to slump to 223 all out as Sharma ripped through the tail to complete a 95-run victory and give India a 1-0 lead in the five-match series.
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Defeat means Alastair Cook's men have failed to win for a 10th successive Test and piles pressure on the beleaguered captain, who continues to struggle with his personal form as his team flounder, particularly against the short ball.
In a spell reminiscent of Mitchell Johnson's destruction of England during the most recent Ashes, Sharma removed Ali, Matt Prior (12), Ben Stokes (0), Stuart Broad (8) and Root in the space of 20 deliveries with the old ball.
Sharma's accurate short bowling tempted all five batsmen into false shots, with three of them mistiming pull shots to a waiting fielder.
Starting the day on 105-4, England were rarely troubled in the morning session as Root and Ali put together a partnership of 101, with the former passing 50 with three boundaries in four balls off Sharma.
Ali had looked well set to pass the milestone himself as lunch loomed, but became Sharma's first victim of a wicket-laden spell to give India a boost before the break.
A short delivery from over the wicket saw the left-hander attempt to duck, but, having taken his eyes off the ball, he fended it away with his gloves to Cheteshwar Pujara at short leg.
Having started the second session well, England crumbled as quick wickets fell and Cook looked on fearing another backlash as his side wilted under pressure.
Prior and Root both looped pulls to the leg-side boundary, while Broad tickled a leg-side delivery to MS Dhoni to leave India on the verge of victory.
England's misery was confounded in the 89th over as miscommunication between James Anderson (2) and Liam Plunkett (7) saw the former run out.
Focus now turns to the third Test in Southampton, which starts on Sunday, with England's performance expected to come under serious examination after they failed to use ideal conditions to their advantage.