While the encounter was largely played in good spirits, Tomic won the encounter 6-3, 6-4 in controversial fashion.
Serving for the match, Tomic caught Kyrgios off guard after hitting an underarm serve between his legs that bounced in his rival's service square.
Tomic won the first battle of the tennis brats 6-3 6-4, although with little at stake it was hard to get a read on their true form heading into the first major of the year.
"I don't think there has ever been a player like BT", Kyrgios said following the match.
Chastened somewhat, Tomic began to rebuild his game last season, winning his first title since 2015 at Chengdu last September and he appears to be carrying that momentum forward.
Tomic's first set was nearly flawless, while Kyrgios looked a little underdone and struggled to find some rhythm early on.
Australian men's No.1 Alex de Minaur looks to have a much smoother path to the second round, the 27th seed opening against Portugal's Pedro Sousa.
Cilic, who was beaten by Roger Federer in an epic Australian Open final a year ago, said his knee was not a worry.
Kyrgios, who was knocked out in the second round at Brisbane last week, was beaten 6-3, 6-4 by friend and fellow comeback candidate Bernard Tomic in an all-Australian battle.
"It is great to see him back out here as I know he was going through some rough times".
"We don't want to hurt ourselves and go too hard, because we've got to play in five days, the important one", said Tomic.
Kyrgios said he was happy to see Tomic back in form after missing the Australian Open a year ago when his ranking plummeted.
"I'll get on site at Melbourne Park, fine-tune my game a little bit and make sure the body's right".
"I reckon that sums up Bernard Tomic and Nick Kygrios", declared the TV commentator.