The 24-year-old singer was one of the opening acts for the 'Cruel Summer' hitmaker's first US leg of her concert series and she admitted performing for her friend's crowds every night helped to "rewire a huge chunk of [her] brain" and eased her debilitating fear.
She told Who What Wear: "I avoided [performing] at all costs".
"That rewired a huge chunk of my brain—not just in terms of performing and stage fright and that kind of s*** but in my life.
"I told myself that I knew I would hate performing. I knew I would be uncomfortable every second that I was onstage, and I didn't end up feeling that way at all.
"It was really lovely to be wrong."
The 'Mess It Up' singer got to join Taylor on stage at London's Wembley Stadium in June to perform their collaboration 'Us', and the moment was an "out of body" experience for her.
She said: "We wrote it the way that we played it at Wembley.
"To see somebody have the ability to, in a stadium, make it feel like you and her are the only two people there, that was hugely important for me to see."
Gracie will rejoin the 'Eras' tour in America and Canada next month and is excited to play songs from her album 'The Secret of Us' at the concerts.
She said: "I am so f****** happy that we get to do ['The Secret of Us'] on 'Eras' just because so much of the album was undeniably inspired by the kind of energy that radiates from both Taylor herself and her fans, [who] are just so committed and passionate."
Gracie previously recalled how she felt like she knew the 'Karma' singer before they even met because the 34-year-old star had been such a big influence on her life.
She told The Sunday Times newspaper: "When I met her, it kind of felt like we had known each other already, which I'm sure there was an element of just like the parasocial relationship thing. I've grown up with her voice in my headphones my entire life."
The 'Risk' singer also described Taylor as a "safe space to land" with any questions about the industry and recalled how she received some invaluable advice on how to cope with back pain whilst on tour.
Gracie said: "She recommended an acupressure mat that really turned things around for me."