The 23-year-old Sim, whose rookie season on the PGA TOUR this year was delayed by a stress fracture in his back, teed off in the first group of the day at 6:15 a.m.
Sim went out in 4-under 32 after making birdies on three of the last four holes of the front nine and a 15-foot putt for par on nine.
'It was a terrific round,' said Sim, whose missed the cut in 2005 when he last played the Hyatt Regency resort course.
Holmes and Australians Craig Parry, Richard Green and Peter Lonard shot 66s. Adam Scott and David Smail opened with 67s, South African Rory Sabbatini was in a large group at 68, and defending champion Nick O'Hern shot 70.
Most of the leading players -- Lonard and Sabbatini were the exceptions -- had morning starts, when light cloud cover and a lack of wind led to perfect scoring conditions.
Sim, who moved to Australia from Scotland when he was 5, was hitting everything left on the practice range Wednesday before his coach, David Milne, made changes to his grip.
'The way I was hitting it on the range, I would have taken 7 under straight away,' Sim said. 'It was just pulling a little bit and my coach sort of changed my grip on my left hand.'
Sim's first season on the PGA TOUR was anything but smooth. After getting his 2007 card in late 2006 via a top-25 finish on the Nationwide Tour, he was diagnosed with a stress fracture in his spine while preparing to play in last November's Australian Open.
He was forced to take nearly four months off, and didn't begin play this year until April, playing 17 PGA TOUR tournaments overall and earning just under $400,000.
He didn't pick up a club during his time off and continues to undergo rehabilitation and core stomach muscle conditioning.
Sim has a PGA TOUR medical extension for next year, which gives him five tournaments to earn $385,000. The Australian must match the money earned this year by Mathias Gronberg, whose at $785,000 was 125th on the money list, the last position allowing a player to keep his card for 2008.
'Probably my first tournament will be Pebble Beach, virtually mid-February,' Sim said. 'When my time comes up, I've got to play well.'
Parry, who played in Japan this year after a lengthy career on the PGA TOUR, said he putted well, but still missed three putts from under 4 feet.
'The greens were pretty hard today, not really holding, which is unusual for this course,' Parry said. 'I'd like the wind to pick up and knock a few guys out of contention.'
Holmes was married last week. His wife, Sara, followed him around the course Thursday. The American only pulled out his driver three times, including on the par-5 15th, which he eagled.
'A cut driver down the bottom of the hill, 8-iron to about 15 feet, and ran it right over the edge for eagle,' Holmes said.
He said it's not necessary for him to hit his driver frequently here.
'The course kind of puts everybody in the same spot,' Holmes said. 'It takes a bit of (my) advantage away, but I'll still go out and play well.'
Another American, Ryan Moore, was in contention before taking a 9 on the par-five 12th, going from 5 under on the day to 1 under.
Moore's tee shot went into heavy rough, forcing him to take a penalty stroke for an unplayable lie. But he hacked out twice more from the same area, missed the green with his sixth shot and two-putted for a quadruple bogey.