Grace Park, a Seoul native, carded a 6-under-par 66 to take second place. Catriona Matthew is one stroke further back at minus-5.
Laura Davies, who is searching for her first LPGA Tour win since the 2001 Wegmans Rochester International, carded a 4-under-par 68 to share fourth place with Mi-Hyun Kim.
Ahn opened with a steady front nine at Nine Bridges Golf Club. She parred her first five holes before rolling in her first birdie at the par-4 sixth. She managed pars on the final three holes on the front side to head to her final nine at minus-1.
The South Korean caught fire around the turn. She birdied the par-4 10th and followed with another on the 11th. Ahn converted a birdie try at No. 12 to make it three straight.
She capped her run of four straight birdies with a birdie at the par-3 13th. Ahn climbed to 6-under with a birdie at the par-4 15th and capped her bogey-free round with a birdie at the par-5 closing hole.
'I am very excited about today, and never expected it,' said Ahn, a teenager who matched Se Ri Pak's course record from last year. 'Every putt was good, even the long putts.'
Park stumbled out of the blocks with a bogey at the par-4 first. She recovered from that mistake with a birdie on No. 5. She then closed out her opening nine with back-to-back birdies from the eighth to make the turn at minus-2.
Park, who owns three LPGA Tour victories, faltered to her second bogey of the day at No. 10 before carding four straight pars.
The 24-year-old closed out her round in fine fashion as she birdied each of the final four holes to grab second place.
Pak, the 2002 champion, opened her title defense with a 3-under-par 69. She is tied for sixth place with Soo-Yun Kang and Hyun Ju Shin.
'I am generally satisfied with my score today,' Pak said.
Tina Barrett is joined by Ok Hee Ku, Candie Kung and Jung Yeon Lee one stroke further back at minus-2.
Teenage sensation Michelle Wie had a terrible start to her tournament. She carded six bogeys, three double-bogeys, one triple-bogey and two birdies in a round of 13-over-par 85 that put her in last place.
'I never played this bad in three years,' Wie said. 'After my first drive, I wasn't feeling really confident and then I got a little uncomfortable, and that's why I kept on going right.'