Playing in the third group of the morning wave in benign conditions, the reigning US Masters champion roared out of the blocks with six straight birdies from the par-four 10th.
His momentum slowed with eight-straight pars before a hat-trick of birdies from the par-three sixth saw him move to nine under par through 17 holes.
With a large gallery watching his every move, the 33-year-old hit his sand wedge approach at the short par-four ninth to 1m and tapped in for his 10th birdie of the round to shatter the course record by three shots.
Speaking after his round the 33-year-old admitted he struggled with his swing in the middle holes in an ominous sign for the rest of the field.
"It was a beautiful morning for golf and I came out hitting great shots and didn't have much work to do to clean them up the first five holes and then made a nice (5m) putt on my sixth hole and I was really rolling at that point," Scott said.
"But it's interesting because I think I've gone through a roller coaster of emotion out there today from cruising after six holes to having to work pretty hard for the next six or seven holes just to make some pars.
"Nothing much was going my way and I got a bit frustrated after missing the green at about the fourth hole and was feeling like my swing was leaving me again.
"But then to hit one good shot on the par-three sixth close and then knock it in and finish really strong I mean it's just incredible how in 18 holes you can do 360 degrees of mood swings and emotions.
"But it was a great start and it's a very nice little course record to have here at Royal Sydney."
Yip leads the chasing pack at seven under par through 16 holes, one clear of David McKenzie (66).
Aaron Baddeley (67), Jason Norris (67) and Jason Scrivener all signed for five-under 67s to share fourth spot, one clear of Steven Bowditch who carded a four-under 68 to sit in a share of sixth spot,
Six players including amateur Brady Watt, who is three under for his round through 17 holes, are a further shot back.
Jason Day and Kevin Streelman, who played alongside Scott on Thursday morning, signed for two-under 70s to sit in a logjam of 10 players in a tie for 17th.
Northern Irishman Rory McIlroy is one under through four holes after teeing off in the marquee afternoon group with Geoff Ogilvy (minus one) and Matt Jones (minus two).
Adam Scott of Australia plays a fairway shot during day one of the 2013 Australian Open at Royal Sydney Golf Club. Photo by Brendon Thorne/Getty Images
Adam Scott of Australia prepares to put during day one of the 2013 Australian Open at Royal Sydney Golf Club. Photo by Brendon Thorne/Getty Images
Adam Scott of Australia plays a fairway shot during day one of the 2013 Australian Open at Royal Sydney Golf Club. Photo by Brendon Thorne/Getty Images