The world No 59 made six birdies in her first ten holes to set up the seven-under effort in perfect early-morning conditions at The Grange Golf Club.
Ewart Shadoff shares the lead with Chinese Taipei golfer Wei-Ling Hsu, who stormed home in the late afternoon with five back nine birdies in her 65.
Swede Madelene Sagstrom is in a tie for third with England’s Bronte Law and five-time Australian Open champion Karrie Webb on five-under, a shot clear of a host of players, including Spain’s Carlota Ciganda and Thai Moriya Jutanugarn.
Ewart Shadoff came into the week in good form after finishing in a tie for 8th at the LPGA sanctioned Vic Open last week.
The 31-year-old said she was feeling confident with her ball striking at the moment.
“I shot four birdies in a row right in the middle of my round, so I holed three or four six-footers for birdie, and overall I just hit the ball well and I putted well,” Ewart Shadoff said.
“Last week I didn’t putt well, especially on my last day, so I worked a little bit this week on my putting and it seems to have paid off.
“I think this probably is my best round in an Aussie Open – I actually really love this course.” Solheim Cup captain Catriona Matthew was the best of the Scottish players, shooting a one-over 73 in breezy afternoon conditions.
Michele Thomson couldn’t capitalise on an early start, carding a 76, which was later matched by Kylie Henry.
Edinburgh-based American Beth Allen had a disappointing start to the tournament with a seven-over 79 after qualifying earlier in the week.