Busch, who is filling in for the injured Brad Keselowski in Penske Racing's No.22 Dodge, lapped the 2.45-mile, 11-turn road course at 123.241 mph for his third pole in 12 career Nationwide starts. He started on the pole and won this race in 2006.
Kyle Busch qualified 0.16 seconds behind his elder brother to claim the outside pole.
Carl Edwards and Elliott Sadler will start on the second row, while JR Motorsports teammates Ron Fellows and Jimmie Johnson will roll off from row three. Johnson, the five-time defending Sprint Cup Series champion, is making his first Nationwide start since October 2008.
Ricky Stenhouse Jr., the current points leader and last weekend's race winner at Iowa, will start 12th. Stenhouse holds a 12-point advantage over Reed Sorenson, who will start 15th.
Chase Miller, Brian Keselowski, Tomy Drissi, Brian Simo and Tim Andrews failed to qualify.
The 82-lap race at Watkins Glen is scheduled to start just after 2:00 p.m. (et).