Yarnold, a three-time winner on the World Cup circuit this season, traveled down the Olympic sliding course in the combined time of 1:56.89 while Pace turned in a time of 1:57.33.
Elena Nikitina of Russia was third, just 0.11second behind Pace, and Katie Uhlaender of the United States was 0.14 second back with two more runs to go on Friday.
Skeleton racing was a part of the two Olympics contested in St. Moritz in 1928 and 1948 and it returned to the Games on a full-time basis at Salt Lake City 12 years ago.
Americans Jimmy Shea and Tristan Gale swept the men's and women's gold medals in 2002, but no one from the United States has earned a medal since.
The competitors ride face first on the sled with their chins only a few inches off the ice while traveling at 125 kilometers an hour.