He's aiming for nearly 23 miles this summer. The record is 19.5 miles.
Mr Baumgartner lifted off Thursday for a test jump from Roswell, New Mexico, aboard a 100-foot helium balloon. He rode inside a pressurized capsule to 71,581 feet - 13.6 miles - and then jumped.
He parachuted to a safe landing, according to project spokeswoman Trish Medalen.
'The view is amazing, way better than I thought,' Mr Baumgartner said after the practice jump, in remarks provided by his representatives.
Thursday's rehearsal was a test of his capsule, full-pressure suit, parachutes and other systems.
A mini Mission Control - fashioned after NASA's - monitored his flight.
Mr Baumgartner reached speeds of up to 364.4 mph Thursday and was in free fall for three minutes and 43 seconds, before pulling his parachute cords. The entire jump lasted eight minutes and eight seconds.
With Thursday's successful test, Mr Baumgartner is believed to be only the third person ever to jump from such a high altitude and free fall to a safe landing, and the first in a half-century.
'I'm now a member of a pretty small club,' he said.
The record for the highest free fall is held by Joe Kittinger, a retired Air Force officer from Florida. He jumped from 102,800 feet - 19.5 miles - in 1960.
Mr Baumgartner is out to beat that record.
He plans one more dry run - jumping from 90,000 feet - before attempting the full 120,000 feet. The launch window opens in July and extends until the beginning of October.
For comparison, commercial jets generally cruise at over 30,000 feet.
Mr Baumgartner has jumped 2,500 times from planes and helicopters, as well as some of the highest landmarks and skyscrapers on the planet.
Among his conquests: the Christ the Redeemer statue overlooking Rio de Janeiro, the Millau Viaduct in southern France, the 101-story Taipei 101 in Taiwan.
He's also plunged deep into the Earth, leaping face-first into a pitch-dark cave in Croatia.
Mr Baumgartner considers that 620-foot-deep cave jump his most dangerous feat so far, soon to be outdone by his stratospheric plunge.
His mission takes its name, Red Bull Stratos, from the stratosphere as well as the energy drink-maker sponsor.
'I like to challenge myself,' Mr Baumgartner told The Associated Press in a recent interview, 'and this is the ultimate skydive. I think there's nothing bigger than that.'
There are no hard feelings between Mr Kittinger and the man who is out to break his record, however, as Mr Kittinger is now 83 and one of Mr Baumgartner's chief advisers.