Satellite-based precipitation (SBP) is emerging as a reliable source for high-resolution rainfall estimates over the globe. However, uncertainty in SBP is still significant, limiting their use without evaluation and often without bias correction. The bias correction of SBP remained a challenge for atmospheric scientists. In this study, the performance of six SBPs, namely, SM2RAIN-ASCAT, IMERG, GsMap, CHIRPS, PERSIANN-CDS and PERSIANN-CSS in replicating observed daily rainfall at 364 stations over Peninsular Malaysia was evaluated. The bias of the most suitable SBP was corrected using a novel machine learning (ML)-based bias-correction method. The proposed bias-correction method consists of an ML classifier to correct the bias in estimating rainfall occurrence and an ML regression model to correct the amount of rainfall during rainfall events. The performance of different widely used ML algorithms for classification and regression were evaluated to select the suitable algorithms. IMERG showed better performance, showing a higher correlation coefficient (R 2 ) of 0.57 and Kling-Gupta Efficiency (KGE) of 0.5 compared to the other products. The performance of random forest (RF) was better than the knearest neighbourhood (KNN) for both classification and regression. RF classified the rainfall events with a skill score of 0.38 and estimated the rainfall amount of a rainfall event with the modified Index of Agreement (md) of 0.56. Comparison of IMERG and bias-corrected IMERG (BIMERG) revealed an average reduction in RMSE by 55% in simulating observed rainfall. The proposed bias correction method performed much better when compared with the conventional bias correction methods such as linear scaling and quantile regression. The BIMERG could reliably replicate the spatial distribution of heavy rainfall events, indicating its potential for hydro-climatic studies like flood and drought monitoring in the study area.