Dimitri Payet scored twice, taking his tally to six in as many games, and St Etienne now lead Toulouse, who were held goalless at Monaco, by virtue of goals scored with 13 points.
Striker Payet put the home side ahead in the 21st minute after being nicely set up by Emmanuel Riviere, who made it two with a header 11 minutes later.
Payet struck again in the 66th with a splendid curled 20-metre free kick, triggering wild celebrations amongst the Geoffroy Guichard crowd, who had not seen their team lead the table since Feb. 20, 1982.
"Let's keep our feet on the ground," Payet told French TV channel Foot Plus.
"Our goal was just to have a great game. When my team mates defend so well, it's easier for me to concentrate on scoring.
"Our main goal is to secure our place in the top flight."
Despite some brief runs of good results in the last two seasons, St Etienne finished only one place above the relegtion relegation zone last term in 17th place.
Next up for Les Verts is a mouthwatering derby at struggling arch-rivals Olympique Lyon.
Champions Olympique Marseille made up for their opening Champions League defeat against Spartak Moscow by hammering promoted Arles-Avignon 3-0 away with an Andre Ayew double.
Ghana winger Ayew, who helped Arles-Avignon gain promotion last season, scored either side of haltime after Benoit Cheyrou scored with a superb free kick just past the half-hour mark.
Arles-Avignon have yet to earn a point since this season.
Marseille, who have eight points from six games, struggled in the first half though as the hosts piled on the pressure. They were twice saved by goal-line clearances from their France striker Andre-Pierre Gignac, who also set up Ayew's first goal.
Promoted Caen beat Lorient 1-0 away to move up to fourth place, two points off the pace.
