The Italian Lampre-Merida rider sprinted to victory over the uphill finish ahead of Australian champion Gerrans (Orica-GreenEDGE) and Cadel Evans (BMC).
"It's great to win here - it was very motivating because this is my kind of finish," said Ulissi.
"I was thinking ahead to Milan-Sanremo, which I'm trying to prepare for.
"It's my first time in Australia and the crowd here is phenomenal."
The second stage concluded with a fast uphill finish with a strong contingent of riders fighting for win. While all eyes were on Gerrans and Evans, Ulissi forged up the right side of the finishing straight to claim the victory with some ease.
Gerrans claimed time bonuses to further extend his lead, while Ulissi slipped into second overall.
"With the exception of the Ulissi, it was great to grab a few more seconds," said Gerrans.
"Hats off to Ulissi. He timed his sprint perfectly and got the jump on us there with 100 metres to go and we couldn't catch him again.
"I'm definitely satisified getting the time bonuses. It would have been nice to grab another stage win today, but you can't win them all."
Earlier in the 150km stage from Prospect to Stirling, Will Clarke (Drapac) found himself in the break for the second consecutive stage, this time with the company of Boy van Poppel (Trek) and 21-year-old Campbell Flakemore (UniSA-Australia).
The trio, which slipped away from the field four kilometres after the start in Prospect, was allowed a 2min 40sec advantage by the peloton.
With Clarke, who won this stage from the break in 2012, the peloton was wise to keep their advantage at a manageable level.
It was tour leader Gerrans's Orica-GreenEDGE team which patrolled the front of the peloton with support from Lotto-Belisol and Team Sky.
With the lead hovering at the minute mark, Flakemore was the first to lose contact from the leaders with 30km to go.
Clarke and van Poppel were eventually caught 10 kilometres later.
With the break caught the pressure was immediately applied at the front of the peloton.
Darren Lapthorne flew the flag for Drapac briefly at the front of the race but his effort was soon shut down by a Tinkoff-Saxo-led peloton.
Garmin set the pace on the front with four kilometres to go while riders were being shelled off the back of the peloton.
Sky’s Ian Stannard attacked with team-mate Porte hitting the front with one kilometre to go. No rider was able to launch a solo move before the full sprint erupted.
Gerrans holds a seven-second lead over Ulissi with Greipel a further four seconds back.
Thursday's third stage is 145km from Norwood to Campbelltown.
Video highlights to come.
Stage 2: Prospect to Stirling, 150km
1 Ulissi Diego (ITA) Lampre-Merida 3hr 52min 14sec
2 Simon Gerrans (AUS) Orica-GreenEDGE
3 Cadel Evans (AUS) BMC
4 Francesco Gavazzi (ITA) Astana
5 Robert Gesink (NED) Belkin
6 Richie Porte (AUS) Sky
7 Ben Hermans (BEL) BMC
8 Fabio Felline (ITA) Trek Factory Racing
9 Javier Moreno (ESP) Movistar
10 Daryl Impey (RSA) Orica-GreenEDGE
General Classification
1 Simon Gerrans (AUS) Orica-GreenEDGE 7hr 12min 31sec
2 Ulissi Diego (ITA) Lampre Merida 0:00:07
3 Andre Greipel (GER) Lotto Belisol 0:00:11
4 Cadel Evans (AUS) BMC Racing 0:00:13
5 Steele von Hoff (AUS) Garmin Sharp
6 Simon Geschke (GER) Giant-Shimano
7 Francesco Gavazzi (ITA) Astana 0:00:17
8 Robert Gesink (NED) Belkin
9 Maxime Bouet (FRA) Ag2r La Mondiale
19 Geraint Thomas (GBR) Sky
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