Kittel, riding for the Giant-Shimano team, came from two bike-lengths back in the final sprint to win by half a wheel, denying Greipel his third-straight win in the event that was raced over 50 kilometers on a closed-street course in downtown Adelaide.
After winning four stages on last year's Tour de France, including the last stage on the Champs-Elysees, Kittel is regarded as a leading chance to win the Tour Down Under, the first event of the 2014 UCI ProTour. While Sunday's race doesn't count towards general classification, Kittel will wear the tour leader's jersey in the opening stage on Tuesday.
Greipel had maneuvered into a winning position on the last of 25 laps of a two-kilometer circuit straddling the Torrens River and seemed to have the race at his mercy. But Kittel showed the power that brought him such success last year when he rode past the Lotto-Belisol rider to reach the finish line first.
"We had a really, really good feeling for the whole train for the lead out at the end," Kittel said. "It was a great team I thought and a perfect start to the new season.
"It's always a bit of a waiting game and you need that little bit of luck to be in the perfect spot at the right moment. I think we did great work and in the end I was in the perfect position and could do my sprint."
Greipel, who won the Tour Down Under in 2008 and 2010 and has claimed 14 individual stage wins in four appearances, again looked sharp at the start of the season but is unlikely to be suited by this year's course, which contains several testing climbs.
He took second place on Sunday ahead of Australian Caleb Ewan while Christopher Sutton of Australia, riding for Britain's Team Sky, was fourth.
Giovanni Visconti of Italy was taken to hospital after a crash that brought down several riders at the end of the sixth lap. Early reports said Visconti, who won two stages on last year's Giro d'Italia, had suffered a compound leg fracture.
He is the second high-profile rider to suffer a serious injury before the start of the tour. French star Thomas Voeckler fractured his right collarbone when he crashed on a training ride last Wednesday.
The first stage of the Tour Down Under is due to take place Tuesday in the Barossa Valley north of Adelaide. Bushfires in South Australia state are threatening the stage, from Nuriootpa to Angaston, and organizers said they will decide Monday, after conferring with state authorities, whether it will take place.