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Mark Verstappen, the winner in Bahrain and Saudi Arabia, started on pole for the third time this season but retired on the fourth lap with a brake problem as flames leaped out of the right rear of his car.
Ferrari's Carlos Sainz won the Australian Grand Prix on Sunday in a triumphant return two weeks after appendicitis surgery as Red Bull's World champion Max Verstappen suffered his first retirement in two years.
Sainz, the only non-Red Bull driver to win a race last season, held off team mate Charles Leclerc before a final-lap crash by Mercedes driver George Russell triggered a virtual safety car and eased the Spaniard's path to victory.
"It was a really good race. I felt really good out there," said a thrilled Sainz.
"Of course a bit stiff and especially physically it wasn't the easiest but I was lucky that I was more or less on my own and I could manage my pace, manage the tyres, manage everything, and it wasn't the toughest race of all.
"But very happy, very proud of the team, and happy to be in a one-two with Charles here."
Lando Norris was third for McLaren, thwarting fourth-placed team mate Oscar Piastri's hopes of a first podium by an Australian driver at the F1 race.
Verstappen, the winner in Bahrain and Saudi Arabia, started on pole for the third time this season but retired on the fourth lap with a brake problem as flames leaped out of the right rear of his car.
It was Verstappen's first DNF since retiring from Albert Park in the 2022 race and ended his run of nine successive race wins.
Verstappen said he was basically driving with the handbrake on from the start.
"That's why already it felt the car was really weird to drive in some corners. It was just very snappy," said the Dutchman.
Red Bull have now suffered two defeats in 26 races dating back to the last round of 2022.
Seven-times world champion Lewis Hamilton was also forced to retire early with a power unit problem after starting 11th on the grid following his worst Melbourne qualifying since 2010.
His team mate Russell completed a dismal day for the Silver Arrows by skidding into gravel at turn six and crashing into the barrier to wreck his car and bring out the virtual safety car.
Sergio Perez finished fifth for Red Bull, one ahead of Aston Martin's Fernando Alonso, who started 10th on the grid and edged seventh-placed team mate Lance Stroll.
Alonso was later summoned to the stewards over Russell's crash.
Yuki Tsunoda was eighth to deliver RB their first points, with ninth-placed Nico Hulkenberg and Haas team mate Kevin Magnussen rounding out the top 10.
Williams had only one driver in the race, with Alex Albon finishing 11th and out of the points in his team mate Logan Sargeant's car, the American ordered to make way after Albon wrecked his own car in Friday practice.
