The former two-time champion produced a solid all-round display to win 6-3 6-2 this morning and beat the American in Melbourne for the third year in a row.
The Belarusian has never lost to 21-year-old Stephens, but is aware of her potential and feels that she provided a good opening-round test.
"Sloane is a player that she has really big weapons," Azarenka told the tournament's official website. "She has a really big serve and really heavy forehand.
"The important [thing] is just to try to control the game as much as you can. But I think she has a great potential. She's always been a dangerous player. She just needs to work hard."
Azarenka is unseeded for the tournament, having slipped down the rankings during her long-term layoff with a foot injury, and will face world number eight Caroline Wozniacki in the second round.