She shot an even-par 36 on the front nine before sizzling in the back-nine with four birdies and a bogey.
"It's been a difficult round with the wind picking up towards the end," Ko said. "Fortunately my club selection worked out well for me in the back nine. I struggled a little bit in the front nine with my long game, but after that bogey on the 10th, which was horrible, I settled down and my game just picked up."
The South Korean trio of Kim Hyo-Joo, Baek Kyu-Jung and Park Chae-Yon, who are bidding to clinch their sixth consecutive Queen Sirikit Cup victory, were surprised to be leading.
"We performed better than we expected as a team, as we did not expect to be leading by three strokes," said Kim Hyo-Joo. "However, we are not satisfied with our individual scores, and we can do better tomorrow."
New Zealand have won the Queen Sirikit Cup three times (1984, 1990 and 1999) with Korea the most successful team in the event's history with 14 wins.