England captain Alastair Cook won the toss and sent Australia into bat under cloudy skies in Sydney and the key wickets of David Warner, Michael Clarke and Shane Watson fell early on the grassy SCG wicket to leave Australia at 97 for 5.
But Brad Haddin once again led the Australian fight-back with an unbeaten 50 before tea, finally falling to Ben Stokes for 75. After a slow start Steve Smith found great fluency as he made 115 to swing the Test in Australia's favour, as the hosts closed on 326 all out despite Stokes taking a six wicket haul for 99.
England's reply started disastrously as Michael Carberry went for a duck as England closed at 8-1.
Australia, who have already reclaimed the Ashes, were unchanged for the fifth Test in a row as they bid to finish the series with a fifth successive win to sweep the tourists 5-0 for only the third time in the long history of the rivalry.
England dropped top order batsman Joe Root, spinner Monty Panesar and seamer Tim Bresnan and awarded debuts to Gary Ballance, leg-spinner Scott Borthwick and paceman Boyd Rankin.
Australia 22-1 - Broad clean bowls danger man Warner for 16 as England make their first breakthrough of the day soon after the batsmen passed 500 runs for the series.
Australia 51-2 - England benefit from a slice of luck as Rogers bottom edges an attempted pull shot through his legs and onto the stumps. He departs for 11 off the bowling of Stokes.
Australia 78-3 - Stokes finds a good length and snares Clarke, who edges and is caught in the slips by Bell for just 10.
Australia 94-4 - Anderson claims England's first lbw of the series, trapping Watson plumb for 43 just before lunch.
Australia 97-5 - Cook nearly makes a hash of a catch in the slips but the England skipper hangs on at the second attempt to dismiss Bailey for 1 off the bowling of Broad.
Australia 182-5 - Haddin reaches 50 - his first at the SCG - off 70 balls, having steadied the hosts' ship to take Australia to 182-5.
Australia 206-5 - Smith follows suit and reaches 50 with Australia on 206-5 as England begin to toil.
Australia 225-6 - Stokes gets a third wicket - the important one of Haddin - as the Australian keeper nicks one to Cook and departs for 75.
Australia 240-6 - Rankin hobbles off for a second time as a hamstring problem appears to get worse - and this time it doesn't look like he'll make it back onto the pitch.
Australia 269-7 - Borthwick claims his first Test wicket as Johnson holes out to Root and departs for 12. Big smiles all around for the debutant.
Australia 288-7 - Smith moves to 99 with a big six off Borthwick before smashing a full toss through midwicket to the boundary in the same over to register his third Test hundred against England, with Australia on 288-7.
Australia 325-8 - Stokes takes his fourth wicket as Harris's brief but entertaining innings ends as he spoons one to Anderson at short extra cover.
Australia 325-9 - Golden duck for Siddle! Stokes collects his second wicket in as many balls as Siddle nicks one to Bairstow. The hat-trick ball gets the Barmy Army excited, but it's prodded sensibly into the turf by Lyon.
Australia all out for 326 - Lyon gets dropped by Anderson at third slip off his second ball, but collects a single - yet Stokes isn't finished with his over yet, and takes his sixth wicket as Smith's marvellous innings ends with a mis-timed attempt to clear 12th man Joe Root at mid-on.
England 6-1 - England opener Michael Carberry has looked uncomfortable from the start and would have been out if Australia had appealed a faint nick off the eighth ball of his innings - but the blunder does not cost the hosts as he falls for a duck on his very next ball to the bowling of Mitchell Johnson, hitting one straight to Lyon at leg slip.
England 8-1 - Stumps.
STATS (via Opta)
Broad claims the one wicket needed to go clear of Andrew Caddick as England's 10th highest Test wicket-taker. They both have 234.
Warner becomes the first Australian opener since Matthew Elliott in 1997 to hit 500 runs in an Ashes series.
Australia have hit 560 runs after being dropped in this Ashes. Most in a series since 2006: 635, by England v Windies, 2009.
England become the third team to name eight left-handed batsmen in a Test XI (West Indies, twice in 2000).
The toss-winner has won four and lost four of the last eight Tests at Sydney.
Three debutants at Sydney means England have used 18 players in an overseas series for the first time.
Sydney is the Test venue with the second lowest percentage of draws (17%) after Melbourne (14%), minimum 10 Tests played.
QUOTE OF THE DAY
Alastair Cook on Joe Root's omission from the side: "He is a very talented young cricketer and he will definitely play a lot for England. We know that. It's a tough call but unfortunately tough calls needed to be made at certain times. When you have a winning side it tends to be a settled side. And when you're not winning, people aren't performing so that's why they get (dropped)."
Why can't England capitalise on a good situation? With the wicket of Watson on the stroke of lunch, the tourists looked well set to bowl out Australia for around 200 on the opening day. But, as we've seen before this series, they failed to turn it into a commanding position.
TWEET OF THE DAY