Kueng thrilled his home-country crowd with a razor-thin victory over Hannes Reichelt of Austria and overall-points leader Aksel Lund Svindal of Norway.
American Bode Miller took fifth place, missing the podium by about a quarter of a second.
Kueng finished in 1 minute, 32.66 seconds. Reichelt came in at 1:32.72 with Svindal 1/100th of a second behind Reichelt. Miller was clocked at 1:33.01.
"I think it's the best place to win a downhill, there are so many people here in Wengen," said Kueng, who had turned in some of the best times in the training runs prior to Saturday's race. "It's a perfect day for me."
Conditions on the course were not perfect. The sunny morning at Wengen quickly turned gray and windy. The International Ski Federation had to shorten the course due to strong winds near the top.
"It was pretty windy at the start, but it was a straight tail wind behind you, so I waited in the start for as long as I could hoping a wind would come up," said Miller. "I had nothing out of the start. I skied pretty well, just not quite the luck in the very beginning."