The defending IndyCar Series champion had a lap of 1 minute, 20.430 seconds at the Anhembi street track, 0.307 ahead of Venezuelan EJ Viso and 0.461 in front of Scotland's Dario Franchitti.
"It was fun out there today," Hunter-Reay said.
Home-crowd favorite Tony Kanaan was fourth despite an injured right hand that caused him problems throughout the day. He will be participating in his 200th consecutive race Sunday, extending the second-longest run in the series. His KV Racing owner, Jimmy Vasser, holds the record with 211.
Points leader Helio Castroneves and Will Power, winner of all three previous races in Sao Paulo, didn't make it past the first round of qualifying after a mechanical problem with the car of James Jakes kept them from posting a fast lap.
Castroneves, another local favorite, will start 18th and Power 22nd.
Hunter-Reay has started on the front row in three of the first four races this season. He was the pole winner in Alabama and started second in Long Beach.
"I'm really proud of the guys and the cars they've been giving me," he said. "Now we just need to bring home some good points tomorrow, that's most important, heading into (the Indy 500)."
Hunter Reay's time was nearly a second faster than Power's qualifying lap in 2012. The temporary Anhembi circuit was considerably faster this year after organizers lowered some of the curbs and widened the track at the first chicane to try to reduce the number of accidents there during restarts.
"Just happy to be starting on the front row, more than anything to be out of the accordion effect for the turn one, and hopefully on the restarts as well, hopefully we'll still be up there," Hunter-Reay said.
The Andretti cars struggled in the first practice session but Hunter-Reay and teammate Viso found the right setting for qualifying.
"I'm proud of how the team came together and moved in the right direction as one," he said.
Power, tagged the "King of Sao Paulo," dominated both practice sessions earlier Saturday and looked poised for another good starting position. The Australian was the pole winner in the season opening race in St. Petersburg and was in the front row in Alabama and in Long Beach.
But he and Castroneves were left out of contention when Jakes' car stopped on the track with an apparent engine failure. Jakes left the car when it appeared the engine was on fire, forcing race officials to stop the section when the Penske drivers were in the middle of their fast lap.
"It was definitely disappointing for us," Power said. "We got a red flag and couldn't do a lap. But it's a long race and it's a nice track which will give us a chance to move up."
Castroneves said "it was a shame" he didn't have a chance to try to fight for the pole.
"I was a bit surprised, all we had to do was finish the lap, I'm not sure why we were not allowed to finish it," he said. "He (Jakes) was out of the way, the car wasn't in a dangerous position. Maybe they had to do that because he left the car."
Kanaan, the 2004 IndyCar champion, came to Brazil uncertain if he could handle the pain from the injury he sustained in a crash near the end of the Long Beach race. The hand was sore and swollen, and he needed ice treatment every time he left the car on Saturday.
Power is in need of a good result in Brazil after struggling in the first three races of the year, leaving him eighth in the drivers' standings. He hasn't won in 14 races, since his victory in Sao Paulo last year.
Castroneves, who has three consecutive top-10 finishes this season in the best start of his career, enters Sunday's race with a narrow six-point lead over Takuma Sato, who won the Long Beach race and will start 12th on Sunday.
"I'm shocked, really, I was very hopeful," Castroneves said. "We will have to change the strategy now, but let's move on. We will remain confident and we will do what we can on Sunday."
Rookie Tristan Vaultier of France crashed three times on Saturday, including during qualifying. He went over the curb at the first chicane and wasn't able to make the turn, hitting the wall hard.
"I tried too hard," he said.
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