The Swiss, favourite to win the opening 7.3 km time trial, completed the technical course nine seconds faster than American Tejay Van Garderen. Slovakia's Peter Sagan was third.
Clad in his brilliant white world time trial champion's skin suit, Cancellara was two seconds slower than Germany's Andreas Kloeden at the summit of the mid-course climb.
But an ultra fast plunge down to Lugano city centre and faultless cornering in the final kms saw the Classics and time trial specialist claim his fourth win of the 2011 season.
"I was more nervous this year before the Tour de Suisse than last year because there were bigger crowds and higher expectations than in 2010," the 30-year-old from Berne said.
"I made a slight mistake too, my fingers slipped early on and I touched the electronic gear change and lost a bit of time."
"Still, that proves I'm still human like everybody else."
"My two big targets are the opening and finishing time trial in the race, and I've managed to take the first one."
"Getting a victory on home soil is always special, too. This was a good day."
Cancellara will wear the leader's jersey on Sunday's second stage, a mountainous 149 km run from Airolo to Crans-Montana but he was not optimistic about his chances of keeping it.
"For sure there will be a change of leader tomorrow because the course is so tough," he said.
"An early break could go with a young climber like Van Garderen in it, and nobody might want to take control."
"Having such a mountainous stage so soon makes it all very unpredictable."
Among the overall favourites, Cancellara's Leopard Trek team mate Andy Schleck of Luxembourg came off worst when a mechanical problem forced him to change bikes early on the course.
The 2009 and 2010 Tour de France runner-up finished 147th, 1 minute and 18 seconds off the pace.
The Tour de Suisse finishes on June 19 with another individual time trial in Schaffhausen.