Gold medal winner Anna Meares revealed that she was struggling with a back problem before the final.
But she said: "I'm so happy with that. I didn't feel my back injury at all during the race.
"I was thinking the crowd was going pretty wild and that I must have won.
"But I didn't see the time until I had got over on the back straight and then I saw the 34.3."
Pendleton, meanwhile, showed a huge improvement on her last Commonwealth Games in Manchester.
She finished fifth in the time trial and fourth in the sprint four years ago, the other event in which she will compete in Melbourne.
"Technically, the race was a bit disappointing but I'm going well and this track is just awesome," Pendleton said.
"I have to be happy with my time. It's faster than I expected to go."