Disable auto correct in Safari?: Apple Support Communities
Apple Support Community user matchiu has figured out where the new Check Spelling Automatically option is located. Apple is apparently trying to port over some of the features of iOS with this option, but I think auto-correct is much better suited to the smaller iOS device’s onscreen keyboard. Fortunately, it is a menu item that can be unchecked. Make sure you are on a page that has a text input field, then click in that field to activate the menu item. Navigate to Edit/Spelling and Grammar/Check Spelling Automatically and uncheck this item.
Nice to know the feature is there, but very glad to find out how to disable it. This same option is available in other OS X Lion applications, such as Mail.
Update: This feature can be disabled system-wide by navigating to System Preferences/Language & Text. Click on the Text tab and then uncheck Check spelling automatically. This will not take effect in Safari, Mail and other Lion apps if they are running, but once they are relaunched they will reflect your changes. Apple gives you the option of setting auto correct on or off as a system-wide default and from there you can enable or disable it on an app by app basis.