Opener Shikhar Dhawan struck 137 after India elected to bat first, and he received impressive support from Ajinkya Rahane (79) and Virat Kohli (46) as MS Dhoni's side scored 307-7 from their 50 overs.
South Africa's key trio of Hashim Amla (22), AB de Villiers (30) and Francois du Plessis (55) all made starts early in the run chase, but India took wickets at regular intervals before eventually dismissing the Proteas for 177, with Ravichandran Ashwin finishing with figures of 3-41.
Read Sports Mole's over-by-over updates below to find out how the drama unfolded at the MCG.
"It's a home game for India," said the former world number one bowler. "There is going to be a lot of Indian support, so keeping the crowd quiet is going to be a big thing."
SOUTH AFRICA: Amla, De Kock, Du Plessis, De Villiers, Miller, Duminy, Philander, Parnell, Steyn, Tahir, Morkel
Philander is off the field again, which is a big concern for the Proteas. The latter stages of this innings could be very difficult.
Fall of wickets: 8-1 (R Sharma 0), 136-2 (Kohli 46), 261-3 (Dhawan 137), 269-4 (Raina 6), 278-5 (Rahane 79), 284-6 (Jadeja 2), 302-7 (Dhoni 18)
Bowling figures: Steyn 10-1-55-1, Philander 4-1-19-0, Duminy 7-0-39-0, M Morkel 10-0-59-1, Tahir 10-0-48-1, Parnell 9-0-85-1