The 20-year-old wildcard, ranked 205 in the world, outpowered 40th-ranked Spanish fifth seed Jessica Bouzas Maneiro 6-4 7-6 (7-4) in 88 minutes on Monday.
It was the best win rankings-wise of Preston's career, bettering a three-set result over Poland's then world No.42 Magdalena Frech at the San Diego Open in 2024.
Preston raced to a 4-1 lead in the first set after just 15 minutes and then went to 5-2 in the second.
She was unable to serve out the match and lost four games in row, but rallied to break Bouzas Maneiro to force a tiebreak, where she held her nerve.
Preston, who will soon play her second Australian Open via a wildcard, was happy with how she overcame some anxious moments.
"I just started thinking - don't worry about the score; every point, play it the same," she said.
"Don't think about the fact you just lost four games in a row.
"I'm lucky enough to have my family here this week. They were all super positive and just going, 'You know what to do'.
"I looked to them a little bit, just more for that reassurance. But ultimately I had to try and trust myself, that I know what is best to do."
Preston, a former top-10 junior, had the better of her more experienced opponent from the baseline.
She'll face either Slovakia's world No.71 Rebecca Sramkova or Frenchwoman Varvara Gracheva for a place in the quarter-finals.
Preston couldn't get past the qualification stage at the Brisbane International last week but managed to beat a player in the top 100 and push No.79 Zhang Shuai to three sets.
"I'm really happy with how I'm playing and hitting the ball and at a level where I want to be," she said.
Preston, who hails from WA, will be hoping to emulate the Hobart run of Australia's top-ranked woman Maya Joint, who reached the semi-finals in 2025 to spark a breakout season.
Monday grew even better for Preston, who teamed up with fellow Australian wildcard Talia Gibson for a come-from-behind success in the doubles.
The pair got past American Quinn Gleason and Holland's Isabelle Haverlag 4-6 6-3 [10-6] in a match tiebreak to move into the second round.
In other first-round results, 2023 Hobart finalist Elisabetta Cocciaretto beat fellow qualifier Ayano Shimizu 6-3 6-4 to set up a second round clash with fourth seed Ann Li.
The American, who reached a career-high No.33 in 2025, rallied from a set down to beat countrywoman Katie Volynets 4-6 7-5 6-2.
Former US Open winner Emma Raducanu is the tournament's top seed in a field that includes 45-year-old veteran Venus Williams.
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