US Open champion Raducanu ended up winning 6-0, 2-6, 6-1 in an entertaining match on day two of the first Grand Slam of the year.
After Raducanu won the first set in just 17 minutes, Stephens -- the 2017 US Open champion -- fought back to take the second, but Raducanu found the edge in the third to break Stephens twice and book a spot in the second round against Danka Kovinic.
"I think that I went out there and I played a great first set. I executed my game plan pretty well and was making very little unforced errors, but of course because Sloane is a great champion, I mean, she was fighting back in the second set," Raducanu said in a news conference.
"Her defensive skills were pretty inspiring actually for me to try and replicate myself later on. So we got into some long rallies. She turned it around. Then in the third set I'm just glad I could regroup and make less errors again and play some good tennis.
"I think 2022 is all about learning for me. Being in those situations of, you know, winning a set and then having to fight in a decider is definitely just all just accumulating into a bank of experience that I can tap into later on down the line."
This was Raducanu's second match this year, after her plans were disrupted by testing positive for COVID-19 at the end of 2021.
That cut short her pre-season plans and saw her pull out of the Adelaide International, and head into the Sydney Classic with just a few hours practice.
Raducanu focused on her serve after that defeat, and headed into the Australian Open talking about how her biggest challenge was to stay "patient."
This is her third Grand Slam, having reached the fourth round at Wimbledon in 2021, and then winning the US Open.
She said she wanted to continue her upwards trend in Australia and she had to work to get past a resilient Stephens in the final match at the Margaret Court Arena.
Stephens' last match was at Indian Wells in October and she had no answer to Raducanu's ruthless first-set display as the Brit eased through that, dropping just four points.
But Stephens then broke Raducanu's serve three times in the second set to take that 6-2.
In the third set, Raducanu started like she did in the first, breaking Stephens' serve twice as she dominated the net.
Then, 5-1 up on her own serve, she converted her third match point to book her spot in the next round.
"I was very pleased, coming out of the first set I played good tennis," Raducanu said. "Of course there was some adversity and in the long rallies she was edging through with her defence.
"I'm happy to have regrouped and in the third set, I don't think the score reflected the level out there, as in the third set I was feeling it, and focusing on getting every ball landing between the lines."
It was Raducanu's first three-set match at a Grand Slam and the first time she had faced a former Grand Slam winner.
"It's my first win in Australia in a Grand Slam. I came here when I played the juniors and I lost first round, so to come out here and get my first win, I was very, very happy and start the year off, yeah, with my first win really," she said.
"I'm just looking forward to building on this, going forward, trying to recover as best as I can for my next match."