Mitchell Starc struck in the seventh over, trapping Mark Stoneman leg before wicket for 18, to leave the tourists on 29 for one when rain at the Adelaide Oval brought an early finish.
Alastair Cook was on 11 with James Vince yet to score in the first-ever Ashes day-night Test.
Stoneman wasted a review, which only confirmed the umpire's decision, ending a dire day for the tourists.
Shaun Marsh earlier notched up his fifth Test century as Australia tightened the screws on England, making captain Joe Root pay for sending the home side in to bat.
Marsh scored a watchful and undefeated 126 off 231 balls.
Steve Smith called a halt to Australia's first innings shortly after the dinner break after Pat Cummins was dismissed for 44.
Marsh went for quick runs ahead of the declaration including a towering six while Nathan Lyon remained 10 not out.
England suffered further indignity just before the dinner break when Cook and Vince collided going for the same catch off Marsh in the gully and the chance off Chris Woakes went begging.
Marsh and Tim Paine both vindicated their contentious Test recalls as Australia took charge.
Marsh, in his eighth recall to the Australian team, backed up his 51 in Brisbane to strengthen Australia's position.
Wicketkeeper Paine, who received a surprise Ashes recall after being out of the Australia side for seven years, cracked 57 off 102 balls.
Paine, who took a couple of painful blows on his right index finger which he shattered seven years ago, shared in an 85-run stand with Marsh before he was caught on the boundary pulling Craig Overton.
Paine had eight pins and a metal plate inserted into the fractured finger which caused him to lose his spot in the Test side back in 2010.
England, who lost the first Test in Brisbane by 10 wickets last week, cannot afford to lose in Adelaide, where Australia have won the two day-night Tests against New Zealand and South Africa.
England had several calls go against them on day two. Marsh had an lbw decision on 29 by James Anderson overturned when a review showed the ball would have gone over the stumps.
Anderson was frustrated again, much to the delight of the home crowd, when a review denied him again after Paine on 24 had been given out lbw on the field.
Peter Handscomb only lasted three balls at the start of the day before he was trapped leg before wicket playing back on his overnight score of 36 by a fired-up Stuart Broad, who gave him an animated send-off.
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