The American BMC rider thundered round the 9.9km circuit in a time of 12 minutes and three seconds, giving him a staggering 14-second lead over British team-mate Steven Cumming.
Garmin-Sharp's Danish rider Lasse Norman Hansen was third, two seconds further back, with Germany's time trial world champion Tony Martin (Omega Pharma Quick Step) fourth, some 22 seconds behind Phinney.
“Winning means a lot. I've been thinking about this race for a while. I was focused on Tony (Martin). I know he doesn't take any time trial lightly, even if it's short and on road bikes,” said Phinney, who chose to start as early as possible after seeing forecasts of high winds later in the day.
“Initially I decided to go early, because the wind report looked like it would build towards the afternoon and the evening. When I looked this morning the forecast said it was going to be the same at 1pm and 4pm."
"I hoped it was same conditions for same everybody, but its hard with 125 riders. He (Tony Martin) had to start last because he's world champion, even if he wanted to start in the first wave.”
Mark Cavendish is among the riders taking part in the four-day race, which continues on Thursday with a 122km ride from Dubai to Palm Jumeirah.
Stage one results
1. Taylor Phinney (USA) BMC Racing Team +00:12:03
2. Steven Cumming (Gbr) BMC Racing Team +00:00:14
3. Lasse Norman Hansen (Den) Garmin-Sharp +00:00:16
4. Tony Martin (Ger) Omega Pharma Quick Step +00:00:22
5. Fabian Cancellara (Swi) Trek Factory Racing +00:00:26
6. Peter Sagan (Svk) Cannondale +00:00:31
7. Adriano Malori (Ita) Movistar Team +00:00:32
8. Maciej Bodnar (Pol) Cannondale +00:00:35
9. Alexander Porsev (Rus) Team Katusha "
10. Peter Velits (Svk) BMC Racing Team +00:00:37