In an at-times chaotic qualifying session, Russell's lap time of 1:18.518 led a front-row lockout for Mercedes, with young teammate Kimi Antonelli 0.293 seconds behind.
Isack Hadjar was third in his first race for Red Bull and Charles Leclerc fourth, while Piastri edged out his world-champion McLaren teammate Lando Norris, who finished sixth.
Antonelli is still to face an investigation after a cooling fan was left on his car in Q3, which damaged Norris's front wing when it fell off the Mercedes and onto the track.
It capped a dramatic day for the Italian, who crashed in final practice and left mechanics racing the clock for qualifying.Â
He then also ruined his first flying lap in the final stage of qualifying with a trip across the grass.
Saturday's other huge shock came from Max Verstappen, who had earlier crashed out in the first part of qualifying, leaving him towards the rear of the grid.
The four-time world champion spun under braking before he even began to turn into the first corner of his opening qualifying lap, sending his Red Bull nose-first into the barriers.
For Piastri, he now has a hill to climb on Sunday.
No driver has won the Australian grand prix in the past 12 years from outside the top three on the grid, with Kimi Raikkonen the last to do so for Ferrari in 2013 from seventh.
The Australian has been among the quickest at Albert Park this weekend, but Mercedes ultimately proved to have too much power when it counted on Saturday.
Further down the field, Carlos Sainz and Lance Stroll were unable to make it onto the track in their Williams and Aston Martin respectively due to mechanical issues.
New team Cadillac at least had their drivers Sergio Perez and Valtteri Bottas competing, but they did not progress out of Q1 as the two slowest cars to complete laps.
Gabriel Bortoleto was able to put Audi into the top 10 in their first race since taking over ownership of the team from Sauber, but reliability problems stopped him participating in Q3.
QUALIFYING FOR AUSTRALIAN GRAND PRIX
George Russell
Kimi Antonelli
Isack Hadjar
Charles Leclerc,
Oscar Piastri
Lando Norris
Lewis Hamilton
Liam Lawson
Arvid Lindblad
Gabriel Bortoleto
