Latvala's time - which was 1.024s faster than his Ford team-mate Petter Solberg - affords him the first choice of where to run on the road on the final gravel round of this year's World Rally Championship.
"The stage was good," said Latvala. "It's quite different in nature to what we will have tonight – it was very narrow. I'm happy with the way it went, but now we have to decide what we are going to do.
"We have to decide which is most important, the dust or the cleaning of the road. I think we will decide to go somewhere in the top five places tonight."
Solberg nudged a bank on his way through the qualifying stage and admitted one of his concerns would be the onset of darkness, with the second run of the 28.14-kilometre Terranova stage.
"The dust could be bad," said Solberg. "But the dust and the darkness would be really bad. We have to think about this. This morning has been good, though, it's a one-two for the team which is what we like."
Sebastien Loeb was the fastest non-Ford in his Citroen.
Loeb's fellow DS3 WRC driver Thierry Neuville dropped seven seconds in the stage after the Belgian forgot to select first gear on the startline.
Mini driver Paulo Nobre crashed in qualifying. The Mini Port team is currently assessing the damage to the car before it decides whether he will take the start and the first two stages in Sardinia this evening.
- Petter Solberg