Following an incident-packed Mid-Ohio round, in which he was involved in tangles with team-mates Romain Grosjean and Devlin deFrancesco, Rossi stormed to the fastest time on the Toronto street track with a 1m00.609s lap that was 0.090s quicker than Meyer-Shank Racing's Pagenaud.
Rahal Letterman Lanigan Racing's Graham Rahal was also within a tenth of the outright pace in third, with championship leader Marcus Ericsson (Chip Ganassi Racing) and two-time Toronto winner Josef Newgarden (Team Penske) completing the top five.
Amid his contract wrangling between current employer CGR and prospective future employer McLaren Racing, Toronto circuit debutante and reigning champion Alex Palou was tenth.
The Spaniard was the first driver into the 1m01s bracket, trimming his initial 1m01.839s lap to a 1m01.478s around the 1.786-mile circuit. Two-time Toronto pole-winner Will Power then delivered a 1m01.324s to go top for Team Penske before Rossi edged ahead by 0.017s.
With 42 minutes remaining in the session, Arrow McLaren SP's Felix Rosenqvist vaulted into first by just 0.005s, right before the red flag flew for an inspection of a drain cover at Turn 2.
A second red flag followed when Juncos Holinger driver Callum Ilott struck the wall at Turn 1, moments after 2009 polewinner Rahal went quickest with a 1m01.218s effort.
After Jimmie Johnson spun his CGR machine while trying his softer Firestone alternate compound tyres, a flurry of laptimes followed on the 'red' tyres.
Pagenaud's team-mate Helio Castroneves was the first to make it count, moving into second place behind Rahal, before Palou went fastest with a 1m01.137s effort and team-mate Scott Dixon slotted into second.
While team-mate Pato O’Ward overshot Turn 1, Rosenqvist then re-took the top with a 1m00.793s lap, but that was quickly shaded by Rossi, Rahal, Ericsson and Newgarden.
Pagenaud’s best flyer was a 1m00.6991s, enough to put him second with five mins to go, but then Castroneves and Dixon went off at Turn 8. While the three-time Toronto winner driver skated straight on, spun around and returned to the course, his MSR counterpart nosed into the tyre wall and needed retrieval.
With too many people then hitting the track in the closing minutes, there wasn’t enough time for anyone to improve, preserving Rossi's position atop the times.
Power had his best lap hindered inadvertently by Rossi, and ended up ninth.
