Cruising at 1-92, Australia then lost 9-88 as they were undone by spin with England star Sophie Ecclestone (4-35) and Alice Capsey (3-22) running riot at the Junction Oval.
Australia were bowled out in the 45th over, with only spinner Alana King (13) reaching double figures of the batters six-to-11.
On a green pitch, only star allrounder Ellyse Perry (60) made a sizeable contribution, putting England in reach of levelling the series.
Australia lost 4-7 in 27 balls during the middle of their innings, with the key wickets of Annabel Sutherland, Ashleigh Gardner, Perry, and out-of-form Tahlia McGrath all falling.
Sophie Ecclestone has grabbed four wickets in the second Ashes ODI against Australia. (James Ross/AAP PHOTOS)
Capsey claimed the big wicket of Perry, with England successfully reviewing an lbw shout.
Vice-captain McGrath's spot is in jeopardy, scoring just 463 runs at 22.04 in international cricket since the start of 2024.
Young opener Georgia Voll, who starred when she filled in for injured captain Alyssa Healy against India recently, is patiently waiting for her next opportunity.
Australia have a 2-0 lead in the multi-format series, with each of the three ODIs and T20s worth two points and the day-night Test at the MCG worth four.
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