Lorie Kane, who won this event in a playoff over Sophie Gustafson in 2000, was two strokes back at five-under-par 67, along with Hiromi Kobayashi and Woo-Soon Ko.
Kim, a two-time winner on the LPGA Tour this season, parred the first four holes at Seta Golf Course before going on a remarkable stretch to jump to the top of the leaderboard.
The diminutive Korean hit a six-iron within one foot of the hole at the par-3 fifth for the first of six consecutive birdies, with the longest putt coming from 12 feet. At the par-3 12th, Kim drained a 15-foot putt for her seventh birdie of the day en route to the first-round lead.
'I changed my irons last week and my driver and fairway woods this week,' said Kim. 'My irons didn't work last week because they were too upright. We fixed them a little bit flatter this week. My irons are working good, seconds shots are almost at every pin.
'I had a lot of birdie chances. In the afternoon, the greens were a little slower, so every putt was short of the hole, and I couldn't hit them far enough.'
Se Ri Pak, a five-time winner in 2002, collected six birdies and two bogeys for a round of 68. Pak was joined by Rachel Teske, Vicki Goetze-Ackerman, Beth Bauer, Kasumi Fujii, Rena Yamazaki, Midori Yoneyama and Mayumi Hirase in a tie for eighth.
Defending champion Annika Sorenstam finished four shots off the pace after a three-under 69. Sorenstam, who is seeking her 10th victory of the season, birdied the first two holes but ran into trouble with a bogey at the par-four third.
Sorenstam recovered with back-to-back birdies starting at the fourth and added another at the seventh to make the turn at minus-four.
The Swede faltered on the back nine, however, with a bogey at the par-four 13th to finish alongside Jill McGill, Junko Omote, Candie Kung, Akiko Fukushima, Hee-Won Han, Rosie Jones, Jeong Jang, Dorothy Delasin, Janice Moodie, Jenny Rosales and Gustafson.
This is the last event in which players can earn money towards qualifying for the ADT Championship. The top-30 players on the money list after this tournament earn a spot in the season-ending event.