Carol Semple Thompson, the owner of seven USGA titles, including four senior crowns, started her 109th USGA event with a 2-and-1 victory over Karen Ferree of Hilton Head, S.C.
Schultz, from Rockwall, Texas, hit just five greens in regulation on the par-71, 5,760-yard layout, including only one on the back nine, and lost a 3-up lead after eight holes to Carr.
Carr took advantage of Schultzs iffy play on the back nine to win holes 9, 13, 14, 15 and 17, the final one as Schultz conceded after failing to get on the par-3 green in three shots.
In addition to her win last year, Schultz was the 2006 runner-up. Carr, who has won numerous state and regional tournaments in the Pacific Northwest, was runner-up to Thompson in 2001.
She also lost to Thompson in the semifinals in 2002 and the third round in 2003. She dropped the game for several years after the death of her mother in 2004 and only resumed in earnest this year.
Thompson, who last won this event in 2002, said she played most of her match like a plumber, not to insult plumbers, before a stretch of better golf late in the match allowed her to prevail.
Carolyn Creekmore of Dallas, who was the medalist in the 36-hole qualifer, advanced with a 5 and 4 victory over Mary Flynn of Eden Prairie, Minn.
Joan Higgins of Glendora, Calif., who won the USGA Mid-Amateur two weeks ago and is trying for an unprecedented sweep, rolled to a 5 and 4 win over Vicky Pertierra of Spain.
Golfers will play two rounds of match play Tuesday, with the finals scheduled for Thursday.