A dramatic late winner deep into stoppage time by Barbara Bonansea gave Italy a come-from-behind win over the Matildas to produce the first big shock of the FIFA Women's World Cup.
Matildas captain Sam Kerr broke her World Cup duck when she scored a first-half penalty to put Australia in front but it was not enough.
La Squadra Azzurra hit back to level in the second half after a defensive blunder by Claire Polkinghorne allowed Bonansea to equalise, before she struck again with a header from a corner deep into injury time to give the Italians a 2-1 win.
Australia - perhaps unnerved by their status as hot favourites for this game - looked nervous at the start and struggled to find their rhythm in the opening quarter hour.
Ante Milicic's team also had the VAR to thank for keeping them on level terms early in the match after the Italians looked to have taken the lead in the ninth minute with a goal that exposed the Matildas' high defensive line.
The ball had broken to Italian midfielder Manuela Giugliano in her own half and she threaded a defence-splitting pass through to Bonansea. The Juventus striker shrugged off her challengers before slipping a shot past Lydia Williams, who got a touch but could not stop the ball rolling over the line.
The Italians' joy was cut short after the VAR examined the goal on replay when the assistant referee flagged for offside and disallowed the score.
Up to that point Australia had only really threatened with an early header by Kerr from a Steph Catley cross, but after that unconvincing start they began to play with more cohesion.
After Alia Guagni fouled Haley Raso on the right of the penalty area to win a free kick, Emily Van Egmond went close with a shot from outside the area when the set piece was cleared, the midfielder's effort only needing a touch from a teammate to cause even more panic in the Italian ranks.
Shortly afterwards Australia got the break it needed.
Ellie Carpenter, who had begun to produce more of her surging runs from the right back position, fired in a cross in the 21st minute.
Kerr went for the ball but was shoved to the ground by Italian captain and centre back Sara Gama, with referee Melissa Borjas having little hesitation in awarding a penalty.
Kerr strode to the spot but her effort lacked the power needed and Laura Giuliani in the Italian goal guessed correctly, dived to her right and parried the shot.
However, the rebound fell straight into Kerr's path, the Australian captain slamming home
That was the catalyst for Australia to find its form, and from that point on Ante Milicic's women controlled the rest of the first half.
Carpenter's rampaging runs down the right were causing the Italian defence problems, Van Egmond hit the bar with a cross-cum-shot, and Chloe Logarzo twice got into dangerous areas for headers.
Italy, having looked the more cohesive team in the opening 10 minutes, now struggled to make an impression.
Its best chance in the remainder of the first half arrived when Valentina Cernoia drove a cross over from the left which Cristiana Girelli connected with, only to be denied by an excellent Williams save as she spread herself at the far post.
Carpenter carried on where she left off in the second period, setting up Caitlin Foord for a 54th-minute shot well saved by Giuliani.
But two minutes later the Italians were back in the game, courtesy of a howler by Polkinghorne. The centre back failed to control a routine pass from Alanna Kennedy, allowing Bonansea to pick up the ball and run at goal, gliding round Kennedy and picking her spot inside Williams' left-hand post.
The game then ebbed and flowed. Foord muscled through on the hour mark and her shot looked goal-bound until it was hacked to safety by an Italian defender.
Kennedy then headed wide from a corner while Bonansea looked dangerous every time she got forward.